‘Drill, baby, drill’ won’t do it
This country can’t drill its way to lower gasoline prices. Yet President Obama is opening the National Petroleum Reserve in Alaska to more drilling, and Republicans in the House passed legislation — rejected in the Senate — to expand offshore drilling in federal waters near Southern California, Alaska and in the Atlantic Ocean while weakening environmental protections. Both were ineffective responses to the public outcry over $4-plus-a-gallon gas.
In the short term, neither would make a whit of difference at the pump. It would take 10 years of lease sales, permits, exploration, infrastructure construction and drilling to pull oil from the 23-million-acre petroleum reserve, which lies to the west of the Arctic National Wildlife Refuge. The most recent lease sale in the area drew few takers, and the U.S. Geological Survey last year concluded that the reserve had only 10% as much oil as previously estimated. And it would take even longer to extract oil in deep ocean waters off California’s shore or in the rough Alaskan seas.
In the long term, the United States is on the losing side of the oil equation, with 2% of the world’s oil reserves yet 25% of the world’s oil consumption. Rising demand in other countries means increasing price competition; recent unrest in the Middle East has only exacerbated an already troubling situation.
In other words, Americans can’t continue using oil at current rates and expect to escape high prices. Over time, the development of alternative energy sources could go a long way toward reducing our dependence on oil. Right now, the best way to control oil prices is lowered demand, in the form of conservation; in the last couple of weeks, the used-car market for gas-thrifty vehicles has become hot again (though motorists will no doubt flock back to gas guzzlers as soon as prices drop). Corporations are only beginning to learn about the money they can save by reducing energy use in their buildings. In Washington, legislators should be talking about tax benefits for companies that permit telecommuting and flexible schedules that reduce car travel.
Instead, Republicans in Congress want to continue the extraordinary subsidies that oil companies enjoy. An effort by Senate Democrats to end many of those subsidies was blocked last week.
Some of the $21 billion in tax breaks the industry benefits from are in keeping with the kinds of deductions all businesses are allowed. But others — such as ethanol subsidies and the ability to write off the reduced value of wells as the oil in them is depleted — are particular to the oil industry, despite a $32-billion profit posted last quarter by the five biggest companies. Ending the subsidies would not affect gas prices, but it would pump at least $2 billion more into the federal budget.
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