McCain plays with fire on offshore drilling
Now that gas is over $4, we're seeing increased pressure to
expand drilling for oil here in the United States. Not only in the
Arctic National Wildlife Refuge in Alaska, but also in other
environmentally sensitive areas in the Rocky Mountains and off the east
and west coasts, especially in Florida and California.
The hypothesis is that if only those pesky environmentalists would
let us, we could drill for more oil here in the US, and then the price
of gas would come down, and we could free ourselves from dependence on
foreign oil from the middle east.
The only problem is that this is complete, total B.S. Even if we
developed all our remaining oil reserves here in the US, it would only
amount to a drop in the bucket in global supply. And this new supply
would be overwhelmed by continued increasing global demand.
The price of oil is determined by world wide supply and demand, not
just what happens here in the US. The reason oil and gas prices are so
high right now is mostly due to increased demand over the past several
years from rapidly developing countries such as China and India. Global supply hasn't kept up with global demand, mostly
because when oil was cheap only a few years ago, it wasn't economic for
oil companies to invest in new supply.
Now Saudi Arabia and other
countries are making investments that will increase supply by the end
of this year and next, and into the future. The amount of oil these countries will bring online over the next
few years will dwarf any additional supply the US could bring on by new
drilling in environmentally sensitive areas. But even so, at best it
will barely keep up with additional new global demand.
Short
term, oil and gas prices will probably decline a bit later this year
due to seasonality, and especially if the Federal Reserves raises
interest rates this summer to strengthen the dollar and control
inflation.
But over the long term, prices will probably keep increasing,
even with all this new drilling. Any additional drilling we do here in
the US won't make a difference to the global price of oil, or the price
we pay for gas, because we are only talking about drops in the bucket
when compared to the global supply and demand for oil.
The bottom line is that we have reached the point where it is
impossible to lower the price of oil or lower the price of gas by
increasing supply, because any new supply will just be overwhelmed by
increasing demand. Every day, more people in China and India
and other countries are buying cars and becoming wealthier, and using
more energy. This new demand is just overwhelming world supply, and
whether or not we drill for more oil here in the US is trivial in
comparison.
The only way out of this mess is to improve energy efficiency and
conservation, and develop renewable alternatives. We have to reduce
demand. Both here in the US and globally. We can't solve the problem
by increasing supply. The problem is not that we need to wean
ourselves off foreign oil. We have to wean ourselves off oil,
period.
So we have a choice. We can open all our beautiful coastlines and
mountains and wildlife areas to oil drilling in an attempt to increase
supply, ruining our environment in the process, and then do what we need to do to improve energy efficiency
and conservation and develop renewables in order to wean ourselves off
oil.
Or, we can skip the part about ruining our environment, and just
proceed straight to doing what we need to do to improve energy
efficiency, conservation, and renewables.
This means
improving the energy efficiency of our cars, trucks, homes, factories,
appliances, everything. Develop renewable biofuels such as cellulosic ethanol and sugar cane ethanol.
The best incentive to facilitate our transition from oil and gas to
other alternatives would be to implement a carbon tax, or at least a
cap and trade system
for carbon emissions. But we also need improved efficiency standards
for cars and trucks.
The choice we face is very similar to the choice regarding the last remaining
old growth forests. We can either cut them all down, and then switch
over to other alternatives to old growth forest wood products, or we can save
our last old growth forests and switch over to alternatives right now.
So whether we drill for oil off our coastlines or not, we are
still going to have to take serious steps to reduce demand for oil here
in the US and globally. We can either start doing that aggressively
now, or wait until after we have ruined our planet by drilling for oil everywhere we can.
A lot of people will say, well we have to do both. We have to
drill for oil and also do all that efficiency stuff at the same time.
The problem is that once we spoil an environmentally sensitive place,
we can't get it back. We have already developed a lot. And adding
more supply just isn't going to make any difference. Only slowing and
reducing demand will make a noticeable difference. We need to start
now rather than wait.
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