RepublicLies: “Drilling will lower gas prices”

Earlier this week John McCain made a speech in which he called for ending the 27-year-old federal ban on offshore oil drilling. McCain said lifting the ban would allow for the production for more oil and would thus reduce gas prices.

Before looking at what McCain said, let it be known that the Republican candidate had, about a month before his recent speech, said he didn’t think offshore drilling would help gas prices. That’s what they call in politics, a flip-flop. Uh-oh.

Now onto his speech. McCain said:

“And with gasoline running at more than $4 a barrel … a gallon … I wish … $4 a gallon, many do not have the luxury of waiting on the far-off plans of futurists and politicians. We have proven oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. And I believe it is time for the federal government to lift these restrictions and to put our own reserves to use.”

Let’s examine the lies in those statements.

McCain implied that increased drilling would somehow lower gas prices at the pump. This is a bold-faced lie. Oil and gas pricing is not that simple.

But let’s look at the math. Supposedly there are 18 billion barrels of untapped oil along our coasts. Seems like a lot, right? Let’s not forget that oil is a global commodity. This means that what is produced in the U.S. doesn’t necessarily stay in the U.S. It is traded on an international market. So, let’s look at those 18 billion barrels and see how they would impact the world market:

In 2006, the U.S. Energy Information Administration reported that the world consumes 83.6 million barrels a day. That means that the U.S. could supply the world with oil for 215 days. Not much of an impact if you ask me.

If we decided to drop out of the international oil market, the offshore drilling could supply the US with oil for 860 or so days. So what happens when the oil runs out in three years?

This isn’t mentioning that there would be no drilling off the coast of California.

Wait, I haven’t even arrived at the kicker. If the U.S. did end the ban on offshore drilling, the oil wouldn’t be ready for production for 10 years.

Richard Carter, with the Defenders of Wildlife, argues that any new drilling would take at least 10 years to pump, and then only knock a couple cents off pump prices.

Also, instead of supporting the increase of oil production, here’s an idea for the next 10 years on how to lower gas prices and better the lives of consumers:

1. Subsidize Detroit auto makers in creating electric cars. Side effect: this also creates more jobs.

2. Give SUV drivers extra cash for trading in their gas guzzlers for more fuel efficient vehicles.

3. Support windmill production to help supplement oil- and coal-fueled power plants.

4. Give major rebates to homeowners who want to install photovoltaic cells to power their houses.

Although McCain’s plan wouldn’t help consumers, it would help one constituency: oil companies.

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4 thoughts on “RepublicLies: “Drilling will lower gas prices”

  1. Jack Goertz says:

    Now you’re straining cedulity. An appeal is now being made to the Saudis to increase flow. Charles Schumer stated that 1 million barrels a day by the Saudis would reduce the price at the pump by 63 cents. At the same time he argues that opening Anwar would reduce the price of gas at the pump by 2 cents. Anwar would produce about a million barrels per day. How can one source reduce the price when another cannot? The answer is, it can’t

    The price of oil is set by the world market. That is set by supply. And as with everything, all markets are driven by scarcity. Increase the supply and the price must change. Say the world price is 150 per barrel. And, say we can pump it domestically for 80 per barrel. What would it sell for? It would sell for the world price of 150. However the increase in suppy will reduce demand. Any addtion to the world’s supply, would reduce cost. Another way to look at it is this. If we get our own, and we have as much oil as Saudi Arabia. If we get our own, we’re not standing at the counter with China and India and one less customer means that much lower prices. Getting our would drive down the world price the same as if the Saudis increase their output.

    That last gymnastically illogical response to drilling is, well it will take years. That argument would have been obviated if President Clinton had not vetoed against the Anwar bill. And ten years from now, although 10 years is a red herring, we’ll be saying the same thing, again, if we don’t get after our own domestic supply. It will take to long. Well 10 years has slipped by and here we go again. The only thing that matters is now.

    The suggestion that Saudi oil has less environmental impact than our own, is also rediculous. We have the technology. We have the oil. Go get it and cut the baloney.

  2. […] drilling in already leased offshore fields Jump to Comments While the debate about whether ending the federal ban on offshore oil drilling rages on, CNNMoney did this nice little bit of reporting: Of the 90 […]

  3. wilco278 says:

    Jack – While oil is inherently transportable and is therefore a global market, the cost of oil is directly influenced by the cost of supply. The lifting cost of Saudi oil (the true cost of pumping the oil out of the ground, not counting the quality of the oil or refining and transport costs) is in the neighborhood of $4-7/barrel. It is some of the cheapest oil in the world to produce. Any increase in Saudi production would decrease the world oil basket price (the averaged price of world oil supplies). ANS crude, an “oil basket” of multiple Alaska North Slope oil fields, has a lifting cost of $12-17/barrel, above the average value of worldwide oil (the world oil basket). So increasing the production of expensive oil will drive the averaged world oil price up. And the averaged oil price is what we pay. Because of the transportability of crude oil, the averaged price quickly becomes the de facto price on world markets.

  4. […] See also the Inverse Square blog post on this subject.  Or here. […]

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