NoaIzumi"Just Say No" to Oil Revenues?, by Paul Driessen
January 18th 2009 04:54
Paul Driessen is the author of Eco-Imperialism (the book that blames enviromentalism for all the problems of the Third World) and a frequent contributor on Townhall.com. This is his latest.
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“California is grappling with a $42-billion budget deficit….California could nearly double its offshore oil production within 12-18 months, without installing a single new platform, by using directional drilling technology…”
Interesting he should mention that, since there’s a proposal by the Department of the Interior to do just that.
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Current oil production off the shore of California is not known exactly, but in 2004, it was 43 million barrels per year.
Really Long Link
So, 40 million barrels/year is probably a reasonable estimate for additional oil production. At $100/barrel, that would be worth $4 billion. After the money has worked its way through the economy (assuming most of it stays in the state), the California government will probably get 10% in revenue, $400 million. In other words, even using optimistic estimates, increased drilling would reduce the current shortfall by less than 1%. Worth doing anyway? Maybe. But increased oil drilling won’t solve the government’s fiscal problems as Mr. Driessen implies.
“In 2005, Hurricanes Katrina and Rita pounded the Gulf of Mexico’s 3,000 drilling rigs and production platforms. Over 200 were damaged or destroyed. But virtually no oil or gas escaped.”
Virtually none? According to a report for the Minerals Management Service of the Department of the Interior, a total of 17,652 barrels of oil spilled into the Gulf of Mexico as a result of Katrina and Rita.
Really Long Link (PDF file, page 27, Table 2)
At 42 gallons per barrel, that would be over 741,000 gallons. Not that large as oil spills go, but the Coast Guard classifies a “major spill” as 100,000 gallons or above.
“Or we can help keep prices at tolerable levels, by developing the domestic oil and gas that we have in abundance”
According to the Energy Information Administration, if the Arctic Wildlife National Refuge (ANWR) were opened up to drilling, peak production would be somewhere between 650,000 and 1.9 million barrels per day. Opening up all coastal areas to drilling would increase American production by about 200,000 barrels.
Really Long Link
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Even the most optimistic estimates for both total between three and four million barrels a day.
Really Long Link
Meanwhile, worldwide production is almost 79 million barrels per day, about 40% of that from OPEC countries.
Really Long Link
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So, at most, increased drilling in the US would increase production (and reduce prices) by only about 5%. Of course, that assumes a free market, which the oil market isn’t. OPEC can simply cut production to compensate.
Worth doing anyway? Maybe. But the numbers don’t lie. We can’t drill our way out of our problems.
Personal note:
I"m going to put this blog on vacation for a few days. I'm heeding the call for a "day of service" on Monday, and I figured I'd call a unilateral ceasefire to the partisanship for Inauguration Day (I'll be too busy watching it on TV anyway). But I fully expect the less-than-fully-truthful pundits to soon be back at work again (if they actually stop for the inauguration in the first place), so I will most likely be back on Thursday. See you then.
Really Long Link
“California is grappling with a $42-billion budget deficit….California could nearly double its offshore oil production within 12-18 months, without installing a single new platform, by using directional drilling technology…”
Interesting he should mention that, since there’s a proposal by the Department of the Interior to do just that.
Really Long Link
Current oil production off the shore of California is not known exactly, but in 2004, it was 43 million barrels per year.
Really Long Link
So, 40 million barrels/year is probably a reasonable estimate for additional oil production. At $100/barrel, that would be worth $4 billion. After the money has worked its way through the economy (assuming most of it stays in the state), the California government will probably get 10% in revenue, $400 million. In other words, even using optimistic estimates, increased drilling would reduce the current shortfall by less than 1%. Worth doing anyway? Maybe. But increased oil drilling won’t solve the government’s fiscal problems as Mr. Driessen implies.
“In 2005, Hurricanes Katrina and Rita pounded the Gulf of Mexico’s 3,000 drilling rigs and production platforms. Over 200 were damaged or destroyed. But virtually no oil or gas escaped.”
Virtually none? According to a report for the Minerals Management Service of the Department of the Interior, a total of 17,652 barrels of oil spilled into the Gulf of Mexico as a result of Katrina and Rita.
Really Long Link (PDF file, page 27, Table 2)
At 42 gallons per barrel, that would be over 741,000 gallons. Not that large as oil spills go, but the Coast Guard classifies a “major spill” as 100,000 gallons or above.
“Or we can help keep prices at tolerable levels, by developing the domestic oil and gas that we have in abundance”
According to the Energy Information Administration, if the Arctic Wildlife National Refuge (ANWR) were opened up to drilling, peak production would be somewhere between 650,000 and 1.9 million barrels per day. Opening up all coastal areas to drilling would increase American production by about 200,000 barrels.
Really Long Link
Really Long Link
Even the most optimistic estimates for both total between three and four million barrels a day.
Really Long Link
Meanwhile, worldwide production is almost 79 million barrels per day, about 40% of that from OPEC countries.
Really Long Link
Really Long Link
So, at most, increased drilling in the US would increase production (and reduce prices) by only about 5%. Of course, that assumes a free market, which the oil market isn’t. OPEC can simply cut production to compensate.
Worth doing anyway? Maybe. But the numbers don’t lie. We can’t drill our way out of our problems.
Personal note:
I"m going to put this blog on vacation for a few days. I'm heeding the call for a "day of service" on Monday, and I figured I'd call a unilateral ceasefire to the partisanship for Inauguration Day (I'll be too busy watching it on TV anyway). But I fully expect the less-than-fully-truthful pundits to soon be back at work again (if they actually stop for the inauguration in the first place), so I will most likely be back on Thursday. See you then.
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