The Facts About ANWR Drilling And America’s Oil Supply

The reality is that ANWR has never been more than a political football. The major oil companies have virtually not interest in drilling there. The environment is simply too hostile and as the perma frost melts is becoming even more so. What they have always wanted is a package deal that includes the continental shelf off of Florida and California. They would then simply ignore ANWR.

Thanks for the plug Joe. All I did was use a little common sense and crunch the numbers.

Let's throw in a few numbers you ignored. Adding 2M bbl/day to domestic production would reduce American oil imports by a full 20% at current consumption levels. To figure out how much that would reduce our trade deficits and the amount of money shipped off to nations not always our friends, just do the math at current prices.

However, that would be a somewhat overstated "savings" as current prices are not strictly driven by supply/demand market fundamentals. They're also driven by speculation and geo-political uncertainty. Reducing the uncertainty associated with domestic supply would also put downward pressure on prices, pressure out of proportion with the supply increase.

The "reward" would be somewhat boosted back up because domestic production does not have to be moved around the world by tanker, so there's an associated side benefit of reduced transportation costs, and reduced carbon footprint associated with that transportation.

The DOE uses some very conservative estimates and examines ANWR as a ceteris paribus case (quite properly) in isolation from other changes such as opening up coastal reserves. Their median estimate using those conservative estimates is that opening ANWR would result in a net reduction of $200+B in trade deficits over a 12-yr period using a median production figure of 2.6B bbls produced over same period. That's without taking anything else into account, such as the additional production from the North Slope fields enabled by extending the lifetime of TAPS.

I think ronbeas has a relevant point about opening the coastal reserves being a bigger prize and ANWR being a "flag" issue, but the opening of ANWR is still on the list for reasons above and beyond ANWR itself, namely the smaller fields and the just-leased NPR lands nearby needing TAPS.

We sit on over trillion barrels and barrel-equivalents of domestic reserves that are blocked from production by Congress. We use about 10 billion barrels a year, roughly half of it imported. We don't have an oil crisis, we have an oil production crisis that is political in nature.

Why is the post I most want to comment on always at the bottom of the list by the time I get to checking things?

Anyways, I think this point is a victim of a very common disorder people have when considering solutions to complex issues. Deep down we all want a single brilliant fix and then move onto the next issue. Obviously this rarely exists. And both sides of this arguement seem to be putting forth pro's with that in mind.

PRO: ANWR drilling is going to fix the situation
CON: ANWR drilling isn't going to make a dent, because by itself it doesn't do enough

Fact is its just part of the solution. In my mind the solution is to open up drilling in ANWR and the coasts. We set the EPA to watch them like hawks to make sure that it is done with a minium of environmental impact. Lease or a bonus tax on the productoin costs could offset this, and I think the oil companies would agree that it would still be worth it to them to make that deal.

This increases our supply by a whole bunch. Assume altogether thats an additional 2 million bpd, we go from importing 12 million bpd to 10, which is a sizeable drop in imports. In the short term this helps us.

For the long term we concurrently run programs for real energy independence. We extend the taxes breaks to wind and solar production, fund far more efficient biofuel production(NOT corn/soybean for gods sake). These programs will take a good while to work out, but can be funded by cutting tax breaks to oil companies that don't need them as well as simply adding more from the general coffers Its value to the nation in the long run absolutely justifies it.

No ANWR won't fix the problem by itself, but taken in conjunction with other steps it will ease us into the next age of energy production.

Um er, i guess pretty much what Tully said, lol.

The vast majority of EXISTING oil leases are not being developed. Want ANWR opened? How about if we say you can drill there, but any lease not developed within one year is forfeited, including existing leases?
Plus, how about making the oil industry pay ALL the costs of building and maintaining both the pipeline and the roads, and BTW, buy their own insurance, NO government guarantees. You break it, you fix it. Period. Go ahead and propose it. The oil companies and the insurance companies know the risks and costs outweigh the potential profit.

Oh, one more thing. ANWR oil wouldn't benefit us at all, because it would be sold to Asia! Costs less to ship it there than here. Oops. Another ugly fact. The USA gets 12.5% of the cost of the oil we give big oil. We would actually be subsidizing China, allowing oil companies to pay 12 cents on the dollar for the product that they sell at 100% plus profit, to our Asian competitors. How's that sound? Like it?

How about it? You all know I'm a big fan of negotiation. Will you give up existing undeveloped leases, make big oil cover the true costs and mandate that the oil from ANWR MUST be sold in the USA? If so, maybe we can do business.