In the Web Column "Separating Fact from Fiction on Offshore Drilling". Reporter Jim DeFede said:“The United States sits on three percent of the world's oil supply but we consume 25 percent of the world's oil. And the fact that it would take seven to ten years for any oil to be produced from those offshore wells, and that it will have no impact on the current price of gasoline, has been all but lost on Bush, McCain, and Crist.”
One of the questions I had was why are oil companies just sitting on permits (DeFede said the oil and gas companies have stockpiled nearly 10,000 permits). Here is the answer from the DeFede report:
“There are a number of reasons. The capacity of our oil refineries are near their limits, so no matter how much oil we pump out of the ground, turning it into gasoline presents a whole different set of problems. Another possible – and dare I say it -- cynical reason for stockpiling the permits and the land is to bank them for future use when the oil prices will likely be even higher.”
2 comments:
There are three points I would like to make.
First off, every gallon of oil we don't have to import is worth pursuing if it is reasonable. By not importing as much oil, we keep our currency a bit stronger and we are also not putting money into the hands of those who are opposed to us and what we stand for (Chavez of Venezuela and "the middle east" as a group). Furthermore, we might actually be increasing the employment of Americans in the process and putting more money in our economy. Even though increasing offshore drilling won't make a HUGE impact on our oil consumption, keeping a bunch of jobs here is always a good thing.
Secondly, a consideration of why existing oil leases haven't fully been exploited is that until QUITE recently, those fields were probably not profitable to drill. Remember that the price of oil has grown by leaps and bounds.
In the future, it would be smart of our usually dumb-ass government to offer leases with penalty clauses if they are not exploited.
Thirdly, this fictitious idea that leases aren't being drilled because of refinery capacity is the dumbest thing I have heard today. Domestically drilled oil would just displace foreign imported oil. Refinery capacity is an issue of demand for oil, not supply. We don't import refined oil products, we refine them here. I don't know what Defede is talking about.
Overall, an energy policy needs to address a number of key factors including reducing carbon emissions but also should consider issues like keeping jobs here and national security implications of importing oil from places that are both unstable politically and don't exactly like us.
Thanks for this informative article.
Post a Comment