Wednesday, March 23, 2011

The Imaginary World in Which Washington Lives
The flood of nonsense .... At the top of the list is the steady stream of senators or members of Congress whose response to higher gas prices is to insist on drilling in every square inch of environmentally sensitive territory in the country. This is supposed to reduce our dependence on imported oil and lower the price of gas. Both sides of this assertion are absurd.

According to the Energy Information Agency, the United States has proven reserves of 22.3 billion barrels of oil. Given our current rate of consumption of 6.9 billion barrels a year, US reserves could meet our demand for oil for less than 3.5 years. That means if we could somehow drill here, now and everywhere, we could be energy independent until the middle of 2014 and then we would be 100 percent dependent on imported oil.

Of course, we cannot suddenly suck all the oil out of the ground at once, it takes time to explore and drill wells and then the oil must be drilled out over time. If we decided that we want to destroy every last national park and coastal region, we may be able to increase production by 1.0-1.5 million barrels a day in five to ten years. At the high end, this would be a bit less than 2 percent of world supply.

Given normal assumptions about how demand responds to price, we would be very lucky to see a 6 percent decline in the price of oil. This means that, in the most optimistic drill-everywhere scenario, we would save less than 20 cents from our $4 a gallon gas. More likely, the savings would be less than half this size.
by: Dean Baker, Center for Economic and Policy Research
t r u t h o u t | News Analysis
March 23, 2011

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