DRILL BABY DRILL--A RESPONSE

A constant refrain repeated by some presidential candidates is to drill for oil in the USA to "generate jobs" and make us "energy independent". I’m paraphrasing here, but this is the essence of the politician's blather: “We have plenty of oil down there! Just get the EPA off our backs and we can be energy independent--and create jobs as well.”

My take on this is that the effort would not be worth the few additional years of wasteful oil consumption we would generate and the jobs produced would be mostly related to the massive environmental clean-up we would need after such an extensive program of national exploitation.

The truth is we once did have plenty of oil down there, but we have used much of it up. One of our problems is the way we use this scarce resource. Our oil consumption is the highest in the world. We got used to the idea that oil was cheap and fell in to wasteful practices. We waste oil driving oversized cars and living in McMansion-style houses. Wastefulness and a steady increase in consumption ate into those reserves which were slowly depleted. US production of domestic oil peaked in 1970 at about 10 million barrels per day (MBD) a rate at about what Russia, today’s top producer is pumping now. About that time (1970s) our wasteful, profligate usage first outstripped our domestic production and we had to begin importing oil. But importing oil did not change the way we used this commodity. At the present time we import more than half of the oil we produce.

According to the Department of Energy’s Energy Information Agency (EIA) today the US consumes 18.8 million barrels of oil a day (18.8 MBD). That is a staggering figure. To get an impression of how much oil that represents, we might imagine aligning that number of oil drums end-to-end (the drums are a standard 35” or 89 cm high) over the Earth’s surface. Were we to begin at the North Pole, the barrels would form a continuous line @10,400 miles long, stretching from the Pole to a point beyond the very tip of South America at Tierra del Fuego! [After the recent BP Deepwater Horizon oil spill which spewed a massive 460,000 barrels of oil into Gulf waters to become the nation’s worst environmental disaster after the Great Dust Bowl of the 1930s my readers should have a good image of what great volumes of oil looks like. But it is worth mentioning that the total spill-volume of that disaster, even now continuing to show up all over the Gulf, was only a bit more than 2% of what we use each day! To carry on my illustration from above, the Gulf oil spill represented by lined up barrels would stretch only over a measly 254 miles.]

One reason we use and waste so much oil here in the US is that it continues to remain relatively cheap. Yes! It is hard to believe, but by world standards our oil prices are much lower than other industrialized nations. For example, gasoline prices in the UK (at more than $8 dollars a gallon) are more than double what we pay here. One reason for the lower price is that the USA still remains one of the major producers with about 5-6 MBD of actual crude oil pumped each day. In comparison Russia pumps the most oil (9.9 MBD) and Saudi Arabia is second (@ 9.7 MBD). (You may note that some reports show that the US is producing about 9.1 MBD but that difference, from what I quote here, is the result of adding in liquefied natural gas to the totals. Since we are concerned here with only crude oil, I have used only figures, which represent that commodity.) Since the US is a significant producer of oil, our prices can remain lower and our UK friends and relatives who must pay more. But even with our domestic production (of either 6MBD or 9.1MBD) we have a daily shortfall of some 9-12(or more) MBD which must be made up by importing many, many barrels of expensive oil that accrues to our national debt, compounds our deficit, and adds to our unbalanced balance of payments.

As noted above, using nearly 19 MBD we are the world's greatest consumer of oil and as such we use more than the next three “highest usage” nations combined. Our main top competitors for this questionable accolade are China, (which consumes less than half of what we use or 8 MBD), Japan, (uses 4 MBD), and India, (3MBD). As is plain from these figures, there must be something amiss with our consumption practices when we as a nation of 314 million inhabitants use more oil than the three next greatest consumer-nations with a total population of more than 2.6 billion (for this I estimate China at 1.3 billion, India at 1.2 billion and Japan at 127 million). Our excessive consumption is plainly a function of wasteful practices. Since we produce only about 6 MBD of crude, we have a shortfall to the tune of more than 12MBD which is made up by importing from foreign producers. Thus a probable first answer for those who suggest we attempt to meet our oil needs by "drill baby drill" should be: "Hold on! Perhaps we should first become a bit more efficient in our use of this increasingly scarce and expensive commodity before we begin exploiting our last reserves."

But what about the politician's claims suggesting we can actually find enough oil right here at home (and their statements always imply that these new underground resources would be sustainable over a long time), only if we were to simply get the EPA off the oil companies' backs and let them drill anywhere in the USA?

Let’s evaluate that claim.

Best estimates of how much oil remains underground are just that, “estimates” but geologists have available a great deal of oil-well yield-data from intensively studied places such as parts of Texas and California. With these they can generate reasonable figures of how much oil might be recovered from similar underground reservoirs in other places.

The US Department of the Interior (USDI) estimates the total volume of undiscovered and technically recoverable oil (our proven reserves) in the United States at about 21 billion barrels of oil. That may seem like a great deal until you compare it to our usage of nearly 19 million bbl per day. In one year the USA consumes (19MBD x 364.25 days = 6,921 million barrels a year) or 6.9 billion barrels per year) nearly seven (7) billion barrels per year (7 BBY). Thus, were we to extract all of our proven reserves, it would net us only (21/7=3) or about three (3) years of consumption at our present rate of use.

Furthermore, were we to attempt to extract oil from every possible underground nook and cranny in the nation, (places that would include many environmentally, culturally, and aesthetically sensitive areas such as the nation's outer continental shelves, the Arctic National Wildlife Refuge (ANWAR) and the National Petroleum Reserve in Alaska) we might be able to produce as much as 134 billion barrels of additional petroleum. Thus, were we actually able to glean 134 billion barrels of oil, how long would it last us? Dividing that number by our annual use of seven billion barrels (134/7=19.1) we see that we would have only about nineteen (19) years of consumption at present rates of use...if we were actually able to realize that goal and mop up the last remaining drop of oil on our home continent. It is worth emphasizing that these sources are not "proven" and we might drill many dry holes. Furthermore, the extraction and transportation costs of such an effort (particularly in the Arctic) would be monstrous and the environmental impact staggering. Imagine many tragic events like the Deepwater Horizon oil spill, multiplied many times over. A calculation of the cost-to-benefit analysis of such a proposition indicates only modest returns for gargantuan effort. Were we to actually unearth that volume of oil, it would provide us with less than two decades of present-style use. So after perhaps a twenty-three year period of present level use, we would have arrived at a point of total dependency on foreign resources. The costs of extraction would have been considerable, we would have depleted our means of modulating the domestic price of oil, and we would be left with a nation of despoiled and devalued shorelines, scarified landscapes, disturbed natural areas, and nature reserves bereft of life. Drill baby drill would have made some of us very rich, and permitted the rest of us to continue to drive over sized vehicles, but perhaps where would we want to go?

On the other hand were we to preserve these resources and use them wisely over the coming decades they would continue to serve us well. Perhaps in the face of some future existential threat to the USA they would be there for our nation's essential needs. But to drill them dry today for no good reason is a mistake. Those oil reserves should remain in the ground for some future, wise and careful use. So the answer to “drill baby drill” should be: NO! The oil remaining in those difficult to access, ecologically sensitive and far away places should be kept as a reserve. To exploit them now is not a sensible or well thought use of a scarce resource, particularly given our present consumption rate. Let’s keep those Alaskan, Continental shelf, and ANWAR reserves underground until we really need them. Instead of mindless exploitation, let us focus on wise conservation of oil, we can do much more with the resources we have--extending the use out many decades, were we to institute only modest conservation practices now. Perhaps our motto for this endeavor should be: "Conserve baby conserve"!


In another blog I will discuss the proposed extraction of oil from tar sands and so-called oil-shale which are even more fraught with peril. Both extraction processes use great quantities of heat and fresh water to extract the oil the contain.

Get the picture!