Drilling in ANWR

2008-07-04

Are people still talking about ANWR?

Because this is the thing to remember:

With respect to the world oil price impact, projected ANWR oil production constitutes between 0.4 and 1.2 percent of total world oil consumption in 2030, based on the low and high resource cases, respectively. Consequently, ANWR oil production is not projected to have a large impact on world oil prices. Relative to the AEO2008 reference case, ANWR oil production is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light (LSL) crude oil prices of $0.41 per barrel (2006 dollars) in 2026 in the low oil resource case, $0.75 per barrel in 2025 in the mean oil resource case, and $1.44 per barrel in 2027 in the high oil resource case. Assuming that world oil markets continue to work as they do today, the Organization of Petroleum Exporting Countries (OPEC) could neutralize any potential price impact of ANWR oil production by reducing its oil exports by an equal amount.

Translation: drilling in ANWR will provide only 1.2 percent of the world's oil in the best case scenario, an increase in supply that OPEC can compete with by reducing its exports. And that's in 10 years.

But what, you say, if we set aside all that oil just for use in the United States? More info:

In all three ANWR resource cases, ANWR crude oil production begins in 2018 and grows during most of the projection period before production begins to decline. In the mean oil resource case, ANWR oil production peaks at 780,000 barrels per day in 2027. The low- resource-case production peaks at 510,000 barrels per day in 2028, while the high- resource-case production peaks at 1,450,000 barrels per day in 2028.

To put this into perspective: total US consumption is 20,687,000 barrels a day. (Source: EIA Oil Facts) ANWR drilling would therefore represent only 2.5 to 7% of total oil production in the United States, and that is its peak in 2028. And the name of the game is gas prices, yes? So if they had been allowed to drill in ANWR, that might've lowered the prices, what, 20 or 30 cents? And that's assuming it was all put into direct US use by the federal government, Venezuela-style.

This is all not to mention that oil producers in the US have 68 million acres that is already set aside for drilling but is not being used. So if we're in such a rush to start drilling everything in sight, why aren't these people being asked?

So why is (was?) this a big deal for Republicans? I would suppose that simple politics is the answer: they can frame the issue as if Democrats are trying to protect the stupid environment like little girly liberals instead of saving America from financial crisis. The other, more cynical view, is that the Republicans are stumping for oil companies to add more onto their bottom line. I'm actually not that cynical, I think it's the former reason: the other day, I heard Sean Hannity screaming that we ought to let the federal government drill in ANWR and sell the oil directly to the people. Big government controlling oil? That doesn't sound like the Sean Hannity I know.

In conclusion, the media has absolutely failed the public in this regard. I hope that people figure out how stupid the whole debate was, because this issue seems like it's disappearing fast. This entry may already be old news.