Drill Here! Drill Now! Pay less!
Photo by Natalie Maynor Licensed under Creative Commons license 2.0.
It wasn't so long ago that the airwaves and blogosphere echoed with the shrill cry of "Drill here! Drill now! Pay less!" It seemed people were so desperate for the price of gasoline to stop its meteoric rise that they were willing to open up every square inch of the country and coastline to oil exploration and eventual extraction, environmental concerns be damned. The former and current governors of Florida softened their position on the issue and became amenable to the idea of oil rigs close to the state's beaches. President Bush has lifted the executive drilling ban on the outer continental shelf and has called on Congress to lift theirs. McCain is making appearances on oil rigs and although Obama has stated we could save conserve as much oil by maintaining proper tire air pressure as we could get by drilling, he has conceded that off-shore drilling is not completely out of bounds. Thankfully, a sudden $30 drop in the price of a barrel of crude and cheaper gas has turned downed the volume of that shallow slogan and exposed its threadbare logic. Perhaps we can even use this temporary respite to come up with a more intelligent, sustainable plan for meeting future energy needs. What exactly? Hit the jump for my answer.
[Source: MSNBC / The Huffington Post / Cattle Network / China Car Times]
First, we need to look at what happened. Obviously, no new drilling has occurred in the past few weeks to increase the supply, so why are we paying less? How can we continue to pay less or at least not have to re-finance the house (good luck with that) to fill up the gas tank? There are several factors at play but perhaps the easiest one to recognize is the fall in demand. Americans have responded to fuel price hikes by driving less and buying smaller, more fuel efficient vehicles. June saw 12.2 billion fewer miles driven (4.7 percent) according to the Department of Transport and there was, in the first quarter of 2008, an average decline in consumption of 900,000 barrels a day. Also, the economy in general has also been continuously soft this year and analysts think this may also help depress near-term future demand and keep the price close to where it is now, if not slightly lower. It's not just America either. The Chinese oil company Sinopec has announced it will temporarily stop importing oil as its current supplies are sufficient and a post-Olympic price hike to international market levels may hold increases in Chinese consumption somewhat in check. Other booming nations such as India and Brazil are also starting to show a lessening of demand.
The other main factor involved with paying less for gas is the rise of the dollar. After many months of steady declines the dollar has pulled a Lazerus and is now showing signs of life. This means a dollar can now buy more oil. The greenback's rise has also taken the wind out of some of the commodities speculation bubble which had contributed slightly to $147 oil. However, unless you control a fund with billions in assets, there's not much you can do to affect currency strength which is why reducing demand remains the place where people should continue to focus their efforts if they would like to keep paying less.
So, what's the plan? Well, we could drill for more in the deep waters of the outer continental shelf, though it would take years to retrieve and still be expensive. We could dig up all the oilshale in the country and squeeze the black stuff out of it, but that would also involve an extended time frame and great financial and environmental expense. So, perhaps we should continue doing what we're doing. Drive smarter, drive smaller, pay less. This seems to help keep prices moderated, slows down the destruction of the only planet we have and encourages innovation by companies keen to develop new technologies that consumers can get excited about supporting. Consider the gains that have been made in green technology in the past 18 months in the fields of transportation and renewable energy production. A plethora of hybrids and electric cars are leaving drawing boards and heading for driveways. Huge numbers of wind and solar projects are being planned and built and technological advances in these and other renewables are announced almost daily. Bio-fuels, though controversial, are being studied and improved and steadily finding their niche in the market. If a company like Mercedes-Benz, with its heritage and tradition stretching back as far as the advent of the automobile, can declare a goal of becoming petroleum free by 2015, then certainly it behooves us to consider how bright our future can be if we do the same. We might even "pay less."
Reader Comments (Page 1 of 2)
Chris M 9:20PM (8/22/2008)
The people promoting offshore drilling conveniently forget the reason why that offshore drilling ban went into effect. It wasn't because we hated oil companies or wanted higher prices, it was because oil spills blackened miles of shoreline.
So the real question we should be asking is: What measures will the oil drillers take to minimize the risk of oil spills?
If the drillers can assure us that there will be no spills, then fine, let them drill away. But I suspect the oil companies can't guarantee that, and aren't willing to insure against oil spill damages.
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tankd0g 9:29AM (8/23/2008)
There's also the issue of the noise they make, possibly responsible for driving away fish and beached whales.
James Sonne 10:46AM (8/23/2008)
The problem with that logic is that Cuba and other nations are drilling off the coast of Florida right where we would be drilling if there were not a ban. A ban by the Florida senate or the USA on off shore drilling doesn't control what drilling will be done there by other countries, and instead of us taking advantage of the oil closest to home, we are giving it away to countries with whom we are not exactly allies.
Sure moving away from oil is what we need to do, but what we also need to do is be economically independent as a nation and militarily secure first. Especially in such touchy times as these.
Yuan 9:36AM (8/25/2008)
I don't think spills are the big environmental concern. Take a gander at this article. I found it pretty informative.
http://www.usatoday.com/money/industries/energy/2008-07-13-offshore-drilling_N.htm
I thought James Sonne made a great point too. If we aren't drilling in the ocean, other countries are. Other countries who may be less technologically advanced and thus bring greater risks of impacting the environment.
montoym 6:34PM (8/25/2008)
Additionally, I seriously doubt that any sort of spill(which are extremely rare and I haven't heard of any recently), is likely to reach the shores from 50 miles+ offshore. Recall that the drilling ban was for the outer continental shelf which starts at 50 miles off shore. Not to mention that oil leaks into the ocean floor from the earth all over the planet all the time and it's not causing any sort of blackened miles of shoreline that I've seen. The ocean has a strange way of "eating" all of that oil.
By that same logic, no noise from any drilling platform is going to be evident from the shore. You won't even see a single platform from the shore. I believe the visible distance to the horizon from the shore is something like 4 miles or so. Even if I'm off a bit, you aren't going to see(or hear) something that's 50 miles away from the shoreline anywhere.
Bailers 11:27PM (8/22/2008)
Great! When can I get my voucher for a free new electric solar powered car? No free voucher? Guess I'll have to stick with my gas powered ICE car for a few more years. Sure would be nice if there was gas to put in it.
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Serge 10:52AM (8/25/2008)
What else do you want for free, Bailers?
Paul 11:29PM (8/22/2008)
I see no reason that drilling should not be a part of the overall plan to keep the oil flowing and prices as low as possible. Singular focus is not going to get us very far in solving the problem at hand. That includes relying on conservation, new technology or drilling. These three and more need to be part of the solution.
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Richard 1:23AM (8/23/2008)
Bailers, there's gasoline everywhere. There is no shortage, it just costs too much! As far as vouchers are concerned, why are you expecting one, exactly?
I'm concerned. on the other hand, that because the price of gasoline is going down, that short memory is in effect. People are going to start looking for those SUV and trucks again, hindering the progress we've already made so far. If gasoline taxes are not going to be put into effect, you can kiss the progress for getting more fuel efficient cars on the road goodbye! We need high price of gasoline for automobiles or we will continue to have poor selection of efficient cars on the road. Look at Europe. They have the right idea with artificially high prices causing a high demand for ultra efficient cars. We should only be so lucky.
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Wise Golden 1:37PM (8/23/2008)
Europe is now fully in a recession. The US is not. Europe never has the right idea...never.
Chris M 2:55AM (8/24/2008)
Golden: Warren Buffet, head of Berkshire Hathaway, just stated that the US is in a recession, and that it will probably last at least 5 more months.
Somehow, I'd put a bit more credibility on a guy that has successfully parlayed his investments into the billionaire levels than the self-promoting boosterism of the Bush administration and its fans.
Johnsi 7:07AM (8/23/2008)
I'm not sure if other nations prices are artificially inflated if you take into account oil subsidies and the externalized costs, especially pollution around refineries. I've got no problems with oil companies, nor their profits since their costs have gone up and margins remained the same, but if you take those things into account, we should always have been paying $4/gallon.
Liquid hydrocarbons will be around a long time despite the peaking of conventional oil. Costs are going to go up no mater how much you drill. The oil industry has done a better environmental job, mostly because of regulation, and the current system is takes a long time to go to production because of the technology and capital involved but also the environmental preparatory work. It can be part of our energy plan, but it will not save money at the pump now, and unethical of any politician to manipulate voters into thinking it will. Producing oil offshore in deep waters takes longer and more money than the oil companies initially thought because any problem sets production back years. It essentially takes a decade.
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tankd0g 9:29AM (8/23/2008)
So wrong in so many ways. Drilling today would decrease the price of gas right now, it doesn't matter that it'll take 5 years for that oil to come to market, speculators would drive the price down this afternoon. Second, the oil companies would have you believe their margins have not increased, but they are not selling much more oil than they have been in the past, so why the record setting profits year after year? I'll tell you why, bullshit accounting.
Serge 11:04AM (8/25/2008)
Recent events have shown that a very real decrease in gasoline consumption has had an immediate effect in pushing the price of crude down.
People who believe in "psychological" effects now of a supply-side event that is 5 years away from having "real" impact please continue to believe. Also, please pray for gas prices to go down. Rocky Twyman says it works.
doug 7:38AM (8/23/2008)
Yes the law of supply and demand is in effect. The price of gas goes up, people use less. Are you expecting the reverse not to be true now that prices have fallen? Take Economics 101 again. Also, with the soft economy demand is further suppressed.
We need more supply in the coming years to offset our own growth, but also that of the world. Here's an idea: if we don't need the new oil we drill, WE COULD SELL IT TO OTHER COUNTRIES!!.
The new CAFE fuel economy standards will ensure that demand lessens with a 35mpg average mandated for 2020. You already see auto manufacturers all proclaiming that they will be "best in class" in fuel economy. We will have 45mpg compacts and 35mpg midsize sedans in the next couple years.
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Wise Golden 1:44PM (8/23/2008)
Awesome -- right on the mark.
Paul 9:06AM (8/23/2008)
"Producing oil offshore in deep waters takes longer and more money than the oil companies initially thought because any problem sets production back years. It essentially takes a decade."
I keep hearing that argument from people who coincidentally don't want us to use any more fossil fuel. However, the Brazilians just discovered the massive Tupi field last year and it will begin producing 30,000 bpd next year, 100,000 bpd year after. Apparently, that's beyond us since we're only the United States of America.
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Wally 9:20AM (8/23/2008)
Bet'cha "Not in my backyard" would soon be the cry if we were to place oil drilling rigs off the coast of Florida's most popular beaches.
It's all political BS anyway.
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tankd0g 9:33AM (8/23/2008)
I hope all those places that vetoed wind farms on their coastal horizon will get stuck with big ugly oil rigs in the same spot.
montoym 6:48PM (8/25/2008)
I've already heard a lot of people using that argument.
But, as I mentioned above, you're not going to see any sort of drilling platform from 50 miles away. 50 miles is the closest any of those platforms would be with the offshore drilling ban lifted. It is called offshore for a reason. It's not going to ruin your family's trip to the beach in any way, shape or form.
It's at least far less of an eyesore than if we'd place a wind turbine on skyscapers and bridges in NYC as was suggested last week by Mayor Bloomberg.
http://www.guardian.co.uk/environment/2008/aug/20/windpower.usa
He's apparently never seen how truly large those wind turbines actually are. Talk about an eyesore, imagine how much NYC's skyline would change?