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  • Morning Bell: Drilling to Save the Economy

    Today the U.S. has about 22 billion barrels of proven oil reserves that can be legally developed. Yesterday, President Bush lifted just one of the many roadblocks that stand between American consumers and the estimated 19.1 billion barrels of oil in the Outer Continental Shelf that are currently off-limits from production. Bush’s rescinding  of his father’s 1990 presidential directive restricting all new offshore exploration and drilling could almost double proven U.S. oil reserves. The next step is getting Congress on board.

    Beginning in 1982, Congress restricted more and more offshore areas through annual Department of Interior appropriations. Each year since then, Congress has denied Interior the funding necessary to conduct leasing of new offshore areas. If Congress passes legislation making it clear to world markets that the U.S. is serious about doubling its proven oil reserves, that would lower prices today. As former former Reagan chief economic adviser Martin Feldstein explains:

    The relationship between future and current oil prices implies that an expected change in the future price of oil will have an immediate impact on the current price of oil. … [I]ncreasing the expected future supply of oil would also reduce today’s price. That fall in the current price would induce an immediate rise in oil consumption that would be matched by an increase in supply from the OPEC producers and others with some current excess capacity or available inventories.

    The problem is that liberals in Congress do not want lower gas prices, increased consumption or increased production. As the Sierra Club’s Carl Pope told the Washington Post: “People who tell us the solution to our problem is drilling offshore are peddling our addiction. The drug is oil, and they don’t want us to get rid of it.” But Pope is a rich man. And liberal Democrats opposed to drilling such as Speaker Nancy Pelosi (D-Calif.) and Sen. Dianne Feinstein (D-Calif.) are rich women who represent wealthy states. They, and their constituents, aren’t hurt by high energy prices as badly as the rest of the country.

    Heritage policy analyst Karen Campbell ran the numbers and finds that going from $3- and $4-a-gallon retail to $5- and $6-a-gallon retail for gasoline would significantly affect working-class Americans. If prices continue to rise at an accelerated pace over the course of a year:

    • Total employment would decrease by 586,000 jobs.
    • Disposable personal income would decrease by $532 billion.
    • Personal consumption spending would decrease by $400 billion.
    • Personal savings would be spent to help pay the cost.

    Contrast those numbers with the extremely low risks from offshore drilling. The National Research Council found that offshore oil and gas drilling was responsible for just 2% of the petroleum in North America’s oceans, compared with 63% from natural seepage and 22% from municipal and industrial waste. Coast Guard reports show the amount of oil spilled in U.S. waters dropped from 3.6 million barrels in the 1970s to less than 500,000 in the 1990s.

    A post-Hurricane Katrina study by the Minerals Management Service found that oil spilled from offshore oil facilities in the Gulf of Mexico were “minor due to the downhole safety valves at wells and operating practices conducted by the oil and gas industry,” and that “while cleanup was required, the volume of oil spilled and impacts to shore from offshore infrastructure were categorized as minor.”

    Quick Hits:

    Posted in Ongoing Priorities [slideshow_deploy]

    11 Responses to Morning Bell: Drilling to Save the Economy

    1. TexasProud, Texas says:

      Just another example of how Congress is out of touch with the real world. They get chauffered around in their taxpayer funded limosines and airplanes, get to gorge on "green" meals in their exclusive dining room, and reap the rewards of "freebies" courtesey of their lobbyist "friends" and special interest groups. It's no wonder that the American public is so very angry and the Congressional approval rating stands at a whopping nine percent!

      We will be paying close attention to the representatives (that are supposed to be voting based on the interests of their constituents) that vote against or silence any proposals that would increase oil or energy production.

    2. Jim Delaney, Rochest says:

      Just this moment heard Sen. Biden on the Senate floor saying that drilling here wouldn't work because American producers would, as now, automatically peg per barrel cost at worldwide levels; thus, any oil produced here wouldn't decrease the cost of gasoline for American consumers. Seductive argument, but what's the truth?

    3. Dave Dierks, Springf says:

      Not to cast a wet blanket here as I am 100% in favor of tapping into ALL of our own oil resources, it is my understanding that we are bound by international treaty to share any off-shore oil we drill with other countries. This means that to make a meaningful impact on the world market, we should also tap in to the rich oil reserves in Alaska, Ohio, Illinois, Indiana, California, Pennsylvania. There is no shortage of oil. There is, however, a total absence of testicular fortitude among Democrats to go after it.

    4. Mike Newfield, Poway says:

      Drill carefully, report to the public about new safer methods and devices. Pursue potential alternative energy systems concurrently. Report about successes, uncover the flops.

    5. Ed, Leesburg VA says:

      Some dots for your consideration. Connect them.

      1. We will always need more energy, not less.

      2. Companies will always need more profit, not loss.

      3. Politicians want to elected & re-elected, not lose.

      4. OPEC nations will hate our guts, won't ever be friends.

      5. Congress will always be protected and out of touch.

      6. We're financially strained and haven't seen the worst yet.

      7. America is still #1, but teetering.

      8. China, Russia and most of Europe are not our friends.

      9. We only know what we can see.

      I, among millions of American citizens (legal and illegal) am disheartened, disenchanted and disgusted. I feel with all of my heart that my federal, state and local governments can't, but mostly don't, want to help us. The problems are too contentious or "hard". I see a world war, ala WW II size, coming and I see our government ready (but mostly willing) to fiddle while Rome burns. More millions should be more frightened, but aren't. More millions should be scared witless, but aren't.

    6. michael montgomery says:

      were these deposits of oil and gas discovered last week? you mean we fought the gulf war,suffered casualties, spent untold billions, when the stuff we need is right here. we cowtow to these opec countries, when they should be begging us to buy thier crap. we citizens have been deceived yet again. we should be the worlds energy supplier. these countries should mean nothing to us. i think the next twenty years will be interesting. could be some changes comming.

    7. Roger l. Cooper, Ver says:

      This situation is incredibly absurd. It appears that Democratic Congressmen are not listening to their constuents who vote.

    8. Joe in Texas says:

      POls always go with the money. We the people may not have the big money but we have the votes. It is time for a new American Revolution. Rise up and vote. Pelosi and Reid are imperious and remote from contact however their positions are national and obligate them to voters not in their district. We should contact them en masse with emails, faxes, and letters.

      ==================

      Liberals are in favor of alternative energy but when investors propose windmill farms or solar panels the liberals block it with legal action. Everywhere you go there are liberals saying, "not here." They do not own public land. It belongs to all the American people.

    9. Danny Grimes Central says:

      My comment: on drilling for oil in the United States/ Or Canada is great. Many Countries seem to have their own fuel reserves, but it is my guess they would profit, if they agreed to share with us.President Bush i'm told comes from an oil family, and must consider that organization, as he was born into it. As for the World market, or anyone who consumes our fuel choices, it would be wise to change, the regulations stoping alternative research, and the creation of jobs toward concerns, for What this Country was, and has stood for in the past.

    10. Edwin Buck, Albuquer says:

      We are in a precarious place. Whether we like it or not, whether we know it or not, there will be a war in the middle east. If we are not independent on foriegn oil, we will be involved, just for self preservation. If we have the vision to start drilling for our own oil, we don't have to be involved. I believe, that we can be oil independent within a year if we can just get off our duffs. These near sighted congressmen and women, are going to destroy us.

    11. Rich Bove NYC says:

      It's incomprehensible how a congress elected by the people is doing everything it can to supress our economy and destroy individuals personal finances. The public is being punished by self serving morons who believe what they think is best for us instead of following what the public needs for basic survival. If GM folds, not only does the corporation go down, but all of the little guys that own dealerships and their employees, because of a sudden rise in the price of oil. Oil is needed by the entire world, not just America, as our prestigious politicians and tree huggers would want you to believe, it is the keystone of global economy,needed and used by THE ENTIRE WORLD. Alternatives are needed, but we need a solution now. Use the oil we have, develop alternatives and gradually replace our dependence. To say driling will do nothing to help is totally absurd. I wonder who these socialist liberals are sucking up to. We need a revolution!

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