As national polls show that more than 70 percent of Americans favor lifting a 29-year ban on offshore oil drilling to help address skyrocketing pump prices for gasoline, U.S. Rep. Michele Bachmann, R-Minn., is crisscrossing her district with a call to remove barriers to drill in offshore areas and the Alaska National Wildlife Refuge (ANWR).
According to the Center for Economic and Policy Research (CEPR) in Washington, however, there’s not enough oil in offshore areas to make much difference in world prices — which drive most worldwide pump prices, including those in the United States.
Citing figures from the U.S. Energy Information Administration (EIA), the center said that at full production — which would be more than 20 years off, the EIA projects — offshore reservoirs may yield 200,000 barrels of oil per day.
“This is only about two-tenths of a percent of current world production, and that’s not enough to affect world prices,” said Dean Baker, the lead author of a CEPR report entitled “Offshore Drilling and Energy Conservation: The Relative Impact on Gas Prices.”
And world prices are what’s critical here. Oil is a world commodity, and even though oil may be produced off the U.S. shore, it still would be priced in the world market. Unlike, for example, Saudi Arabia and Venezuela, which own and operate wells and refineries, U.S. oil is produced by private companies whose product is priced in the world market.
In addition to knotty political problems (several governors, including Republican Arnold Schwarzenegger of California, oppose lifting the drilling ban), there is a worldwide shortage of drill ships that are needed to bore down to where the deep oil fields may be located.
But Baker had a larger point to make.
The CEPR said that had the U.S. improved automobile efficiency standards at a very modest rate of four-tenths of a gallon per year between 1985 and 2007, the United States would have saved a staggering 3.3 million barrels of oil a day, or more than 16 times the rate that may be obtained from offshore sources.
Presidents Gerald Ford and Jimmy Carter pushed national fuel-efficiency standards in cars after the oil embargo imposed by the muscle-flexing Organization of Petroleum Exporting Countries (OPEC) in the 1970s. But as oil prices fell in the 1980s, automakers and their allied labor unions converged to politically stomp out a continuation of the fuel-efficiency requirements, a move that helped drive Americans to turn to gas-guzzling SUVs and large pickups.
From 1980 to 1985, said Baker’s report, fuel economy in cars improved by 1.5 miles per gallon (mpg) per year, and for light trucks the efficiency went up by 1.1 mpg over the same period. Large trucks were spared from efficiency standards, on the argument that they were needed by small business and agriculture. That led automakers to build passenger SUVs on truck frames, and that helped make the United States the world’s largest oil consumer (with 5 percent of the earth’s population, the United States consumes a quarter of the world’s oil).
For its analysis, the CEPR assumed that auto-efficiency standards would have improved mileage by only a half gallon per year, less than a third of the pace when the standards were in place.
While Americans express concern about pump prices exceeding $4 per gallon, compared to other countries gasoline here is a relative bargain. A worldwide sampling of gas prices: Japan, nearly $6 a gallon; Britain about $8.30; France over $9.50; Turkey about $11.25, and Germany $11.50. Venezuela, which nationalized the oil-production industry, charges its citizens just 12 cents a gallon.