EPIBuilding a Sustainable Future
Drilling for Oil is Not the Answer
September 18, 2008

Jonathan G. Dorn

Background

  • The United States consumes nearly 21 million barrels of petroleum per day (7.5 billion barrels per year), one fourth the world total. (1)
  • Of the crude oil consumed in the U.S., 66 percent is imported. (2)
  • The U.S. is on pace to spend over $500 billion on petroleum imports in 2008. (3)
  • U.S. oil production currently occurs onshore in the lower 48 states (2.9 million barrels per day (mbd)), offshore (1.4 mbd, primarily in the Gulf of Mexico), and in Alaska (0.7 mbd). (4)

More Drilling Cannot Make the U.S. Energy Independent

  • The U.S. Geological Survey estimates that 10.4 billion barrels of oil are technically recoverable in the Arctic National Wildlife Refuge (ANWR)—less than one and a half years of consumption. (5)
  • The U.S. Department of Energy (DOE) estimates that of the 59 billion barrels of technically recoverable oil in the Outer Continental Shelf (OCS) of the lower 48 states, only 18 billion are off limits under the federal moratorium. (6)
  • DOE projects that lifting the OCS moratorium would not increase production before 2017 and that by 2030 production would only amount to 0.2 million barrels per day—less than 1 percent of current consumption. (7)
  • Total U.S. proved oil reserves are estimated at 21 billion barrels—less than a 3 year supply at the current rate of consumption. (8)
  • Since peaking in 1970, U.S. crude oil production has declined 47 percent. World production could be peaking now. (9)

More Drilling Will Not Reduce Oil or Gasoline Prices

  • DOE projects that opening ANWR would lower gasoline prices at the pump by a mere 2 cents per gallon. (10)
  • Lifting the moratoria on drilling in ANWR and the OCS would reduce the price of a gallon of gasoline by at most 6 cents—and this would not be seen for at least another decade. (11)
  • Oil is traded as a global commodity and its price is set on the world market. The Organization of Petroleum Exporting Countries (OPEC) could simply reduce exports to negate even the nominal potential price reduction, a fact acknowledged by DOE. (12)

We Can Move Beyond Oil

  • The increase in U.S. automobile fuel economy standards to 35 miles per gallon of gasoline mandated by the Energy Independence and Security Act of 2007 is projected to save more than 1.1 million barrels of oil per day in 2020—roughly half of current U.S. imports from the Persian Gulf. Technology exists to raise standards higher faster. (13)
  • Electrifying the U.S. transportation system and restructuring urban transport could reduce petroleum consumption by over 50 percent, nearly eliminating the need for imports. (14)
  • Wind-generated electricity could power plug-in hybrid cars, such as GM’s prototype Chevy Volt, at the equivalent of less than $1 per gallon of gasoline. (15)

 

ENDNOTES

(1) Petroleum includes crude oil, lease condensate, unfinished oils, refined products obtained from the processing of crude oil, and natural gas plant liquids. U.S. Department of Energy (DOE), Energy Information Administration (EIA), Petroleum Basic Statistics, at www.eia.doe.gov/basics/quickoil.html, updated July 2008.

(2) Ibid; crude oil from “U.S. Daily Average Supply and Disposition of Crude Oil and Petroleum Products, 2007,” Table 2 in DOE, EIA, Petroleum Supply Annual 2007, Volume 1 (Washington, D.C.: 28 July 2008).

(3) Projection based on average imports /css/em___at__a_href_.css"http:/tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm" target="_blank">http:/tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm, updated 26 August 2008; DOE, EIA, F.O.B. Costs of Imported Crude Oil by Area, at http:/tonto.eia.doe.gov/dnav/pet/pet_pri_imc1_k_m.htm, updated 29 August 2008.

(4) “Liquid Fuels Supply and Disposition, Oil and Gas Technological Progress Cases,” Table D.9 in DOE, EIA, Annual Energy Outlook 2008 (Washington, D.C.: June 2008), p. 179.

(5) DOE, EIA, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” at www.eia.doe.gov/oiaf/servicerpt/anwr, updated May 2008; U.S. Geological Survey, “Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis,” fact sheet (Washington, D.C.: April 2001).

(6) The OCS refers to the underwater area under federal control, typically between 3 and 200 nautical miles offshore. DOE, EIA, Annual Energy Outlook 2007 (Washington, D.C.: February 2007), pp. 50-52; U.S. Department of the Interior (DOI), Minerals Management Service (MMS), Gulf of Mexico Region, “What is the Outer Continental Shelf?” at www.gomr.mms.gov/homepg/whoismms/whatsocs.html, updated 6 January 2000.

(7) DOE, EIA, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf,” at www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html, viewed 16 September 2008.

(8) Proved reserves are those that are recoverable under existing economic and operating conditions. DOE, EIA, “World Proved Reserves of Oil and Natural Gas, Most Recent Estimates,” data table, at www.eia.doe.gov/emeu/international/reserves.html, updated 27 August 2008; DOE, EIA, op cit. note 7.

(9) DOE, EIA, Crude Oil Production, at http:/tonto.eia.doe.gov/dnav/pet/pet_crd_crpdn_adc_mbblpd_a.htm, updated 28 July 2008; Lester R. Brown, “Is World Oil Production Peaking?” Eco-Economy Update, 15 November 2007.

(10) A reduction in oil price of $1 per barrel translates into a reduction in gasoline price at the pump of approximately 2.5 cents per gallon. DOE, EIA, op. cit. note 5; Government of Nebraska, “Nebraska Gasoline and Diesel Prices,” at www.neo.ne.gov/statshtml/125.htm, updated 12 September 2008.

(11) Bill Scher, “Offshore Drilling Comes Up Empty,” Campaign for America’s Future, at www.ourfuture.org, updated 17 June 2008.

(12) DOE, EIA, op. cit. note 5.

(13) Projected oil savings from Union of Concerned Scientists, “Clean Vehicles: Successes,” at www.ucsusa.org/clean_vehicles/successes, updated 27 August 2008; The White House, “Fact Sheet: Energy Independence and Security Act of 2007,” press release (Washington, D.C.: 19 December 2007).

(14) Gary Kendall, Plugged In: The End of the Oil Age (Brussels: World Wide Fund for Nature, March 2008), pp. 79-86; potential reduction in consumption calculated from Stacy Davis and Susan Diegel, Transportation Energy Data Book – Edition 26 (Knoxville, Tennessee: Oak Ridge National Laboratory, 2007), pp. 2-7, and from Table 5.21 in DOE, EIA, Measuring Energy Efficiency in the United States' Economy: A Beginning (Washington, D.C.: October 1995), p. 43.

(15) General Motors, “Chevy Volt FAQs,” at http:/gm-volt.com/chevy-volt-faqs, viewed 17 September 2008; cost equivalent of $1 per gallon calculated from Ryan Wiser and Mark Bolinger, Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007 (Berkeley, CA: Lawrence Berkeley National Laboratory (LBNL), May 2008), p. 17; American Wind Energy Association, “Inflation Adjustment Bumps PTC Up to 2.1 Cents/kWh,” Wind Energy Weekly, 20 June 2008; integration, variability, and transmission costs from Ryan Wiser, LBNL, Berkeley, CA, email to Jonathan G. Dorn, Earth Policy Institute, 31 July 2008; General Motors, “Chevy Volt Specs,” at http:/gm-volt.com/full-specifications, viewed 1 August 2008; U.S. Department of Transportation, Summary of Fuel Economy Performance (Washington, DC: October 2006), updated to new MPG estimates using U.S. Environmental Protection Agency, Office of Transportation and Air Quality, “EPA Issues New Test Method for Fuel Economy Window Stickers,” regulatory announcement (Washington, DC: December 2006).

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For information on Earth Policy Institute’s plan to restructure transportation systems and move away from oil, see Plan B 3.0: Mobilizing to Save Civilization, available at www.earth-policy.org for free downloading.