The Immediate Benefit Of Offshore Drilling

National Review: The Idea That Drilling Won't Bring Down Gas Prices Is Wrong

(National Review Online)  This column was written by Mark Hemingway.

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After trading at a record high of $147 a barrel Friday, the price of oil saw its largest one-day drop since the 2003 beginning of the Iraq war on Tuesday, falling $6.44 a barrel. Wednesday, it fell another $3.71, to $135.03, and at one point was trading as low as $132.

So what happened? As is usually the case with markets, a variety of factors caused this dramatic drop. According to the Associated Press, the Energy Information Administration announced that U.S. crude-oil supplies rose by 3 million barrels; beleaguered banks have been selling off valuable energy contracts to pay for other debts; and there’s even some speculation that computer programs used by Wall Street may create a “cascading effect” once prices start to drop.

But bizarrely, the AP didn’t mention that on Monday - again, the day of the single biggest one-day drop in oil prices in five years - President Bush removed the executive order imposing a moratorium on offshore drilling in the United States.

To think that this dramatic and unexpected move by the Bush administration didn’t have a significant effect on oil prices is folly. Even Democrats admit that relatively small margins in oil production could have a huge impact on prices.

“If they [Saudi Arabia] produced half a million barrels more oil a day the price would come down a very significant amount and, at the same time, it would stop the speculation that keeps driving up the price of oil,” Sen. Charles Schumer (D., N.Y.) said on the Senate floor Wednesday.

But if half a million barrels a day is all that’s needed to get the price of oil down, why, pray tell, are we at the mercy of the Saudis?

Last December, at the behest (and expense) of the American Petroleum Institute and Shell oil, I flew down to the Gulf Coast to visit an offshore oil platform. They helicoptered me 165 miles out into the gulf and I stepped onto Brutus, a tension-linked platform anchored to the seafloor 3,000 feet below. It would be an understatement to say I was in awe. Until you’re actually standing on one you can’t begin to appreciate the sheer size and complexity of such a thing.

The platform is the size of a few football fields jammed together, and the top of the derrick was easily a few hundred feet off the water. Dozens of people lived on board, and everything - from the computer systems to the actual drilling rig - was state of the art. Brutus produced over 100,000 barrels of oil a day - down from over 300,000 at its peak capacity.

That sounds impressive. But here’s what truly floored me: Shell decided Brutus’s location in the gulf would be profitable for drilling in April 1999. The company then built the massive oil platform, transported it to the right location in the gulf, anchored the floating leviathan onto the seafloor 3,000 feet below, drilled 17,000 feet below that, and began producing oil in July 2001. It took only two years to get Brutus online.

Of course, it helps that the oil companies have plenty of money to throw at the problem. Constructing oil platforms can cost in the billions of dollars. A few new oil platforms equivalent to Brutus off-shore in the U.S. could easily account for the half a million barrels Senator Schumer claims are driving prices up.

Of course, it’s not as simple as saying that, if we allow more offshore drilling, the oil companies will have America’s energy problems solved in a mere two years. It takes time to discover oil, for one thing. But they’re getting much better at finding it. The technology for oil prospecting has improved dramatically. At Shell’s headquarters in New Orleans, I visited their conference room where geologists, engineers, and executives gather to make decisions about where to drill. Suffice to say, it involves looking at scarily accurate maps and computer-generated images of cross sections of the earth’s crust on a 10-foot-high screen the width of the room. And it’s all in 3-D.

But due to restrictions on drilling, much of America’s coastline has never been fully explored, let alone with the latest technologies. Just a few months ago, an oil find was made off the coast of Brazil that might contain 33 billion barrels of oil. Now imagine what a similar find off the coast of America would do for oil prices.

Again, there’s no guarantee that oil will be up and pumping in just a few years. But given the price of oil, and the fact that oil companies have an obscene amount of cash sitting in the bank to throw at prospecting and construction of new facilities, oil companies are highly motivated. There’s an excellent chance they’ll start producing oil much faster than naysaying politicians would have you believe.

It’s also worth noting that existing oil production in America is declining, particularly in the Gulf Coast. The long-term path to energy independence can’t focus exclusively on offshore drilling at the expense of other forms of energy and new technologies.

California governor Arnold Schwarzenegger recently said that the idea that more offshore drilling would bring down gas prices amounted to “blowing smoke.” The cigar enthusiast might want to reconsider that statement-as should Obama, who also opposes more drilling. It’s a losing political issue. With gas $4 a gallon, a June Gallup survey found that 57 percent of Americans support drilling off-shore and in wilderness areas.

Saying offshore drilling won’t bring down gas prices is demonstrably wrong. The price of gas dropped significantly upon Bush’s word that more domestic offshore drilling was one small step closer to becoming a reality. How much more will it drop if we actually start drilling and producing oil?

[thepitbull13]

So we should let China(one of the worst on the environmental record) keep drilling off the coast of Florida and maintain our dependence on foreign oil until we find efficient and affordable alternatives? We are only shooting ourselves in the foot.

[joyous88]

bombadi14, Thank you for the support,

and a, right on! to you,

Reagan was the first in a cabal of criminals to inhabit the white house,

the two bush''s, reagan, cheney, rumsfeld , wolfowitz,
et al,

by the way did anyone notice that most of the group of

draft dodgers was also responsible for the vietnam

wars long duration, dumbing down the education system,

and destroying any viable energy policy,

who can we thank for putting these criminals in the

white house?

the christians, the mindless christian voter, thats who.

vote for any one and any thing the big white guy in the big white pulpit tells you to

[dmgenet]

We are not at the mercy of the Saudis as NRO and other oil adherents like to state. They have little stake in driving up costs for us or anyone.

The last time they actually tried to inflate the cost of oil, the US and others started looking elsewhere for oil and found it.

Quit blaming the Saudis and blame the US for short sited energy policies that favor domestic big oil. An industry that thinks they are an oil company. They need to make an adjustment and look upon themselves as an energy company.

[dmgenet]

Hey, how about Bush in his final days declare a War Powers Act and brings his oil baddies (I mean buddies) to toe.

First cut the speculators out of the equation...they are responsible for about 30% of the price of oil.

Next, kinda nationalize the oil companies while we are in a "WAR" on terrorism. (This of course can include domestic terrorists as the Iraq war become wholly successful. We will need more terrorists to help us to unite against.)

Next, do what most Presidents do during "war". Tax the he!! out of everyone. NOT tax CUTS. TAX. Bush being the first President,EVER, to cut taxes during a "war" was a stroke of genius. For the wealthy. Brilliant

He was able to give tax cuts to the top 3% of the country, allow those same people to make millions more on war profits while getting working class people to believe we are in a "war" to establish democracy and or freedom in a Muslim country AND protecting us as well.

Talk about laughing all the way to the bank. Oh, the bank is no longer there. Oh, hell the Bush Feds will bail them out too...

[andor3]

bombadil4 said: "Unfortunately Reagan was elected and promptly announced it was morning in America again and too many people were stupid enough to buy into it."

So true. We are now facing the disastrous legacy of living in a fantasy land and pretending things were good and everyone was happy and prosperous. Anyone who said "here is what is true, here are the challenges we must face..." was dismissed as a whiner as Americans reached for another donut, bought more stuff, used more energy, and secretly wondered why they were less and less happy...

[chatmandu002]

So many whiners with no solutions. How about drilling off shore by trading those leases that don''t produce oil for leases that do produce oil. Give "big oil" all the tax write offs they need to make us oil independent ASAP. Open up the arctic reserve. Make the tax code friendly to free market forces that will produce other forms of energy. This process will reduce our carbon emisions by 50% within 30 years and ease the transformation to alternate sources of energy. Nothing will happen overnight but the process has to start and start now.

[bombadil4]

Fashionable as it has been lately to bash Jimmy Carter, Joyuous88 is correct that the Carter Administration had a sane and reasonably low-pain plan to achieve energy independence. Unfortunately Reagan was elected and promptly announced it was morning in America again and too many people were stupid enough to buy into it. It was hardly morning--more like mid-afternoon and now it''s twilight time. In fact there is a growing feeling that the supposed "vast" reserves in Saudia Arabia may be a myth because the Saudis don''t currently have the technology to extract it. In other words, the "Peak Oil" scenario may already be knocking at the door and the party''s over.

[hasher47]

What Mr. Hemingway fails to mention is that Big Oil ALREADY has 41 million leased offshore acres.
Only 19.8% are in production.
That leaves approx. 32,000,000 acres to explore, drill, and bring into production.
These lease acres DO NOT have a moratorium on them.
Write and ask your Congressman or woman why Big Oil is NOT developing already existing leases.

Big Oil HAS millions of leased offshore acres.
How many oil exploration teams do you people think there are? They NEED to explore their already existing leases...PERIOD. Big Oil and the Repubublicans, who don''''t give a c rap about Americans and the economy are using the Oil shortage to get every last area to exploit. WAKE UP, PEOPLE!!!

[andor3]

Do not miss the quote below in the article. It shows the author is neither impartial nor a journalist. Journalists and editors are forbidden by ethical rules from taking trips funded by corproations they cover. If you need to see why, this article proves the point that they can be swayed to the point of lying.

"Last December, at the behest (and expense) of the American Petroleum Institute and Shell oil, I flew down to the Gulf Coast to visit an offshore oil platform"

[andor3]

Bush and his cronies should not be allowed to get away with this con job--they seek to distract people with an endless debate on something everyone knows is a bad idea, meanwhile they continue to benefit from high prices and profits and keep everyone tied up in knots and unable to address the real issues. Of course the mouthpieces like NRO jump in and help their sinking neocon buddies.

more kudos to Congress for doing the right thing and not being swayed by this con and disinformation campaign. Drilling on natural preserves will not help gas prices significantly and would damage natural reserves that are protected for a reason.