‘Drill, baby, Drill VS Basic Math: A letter to my family.

Several days ago I had the pleasure of a dinner with my extended family at the Cheesecake Factory. As with most such gatherings, it took around fifteen minutes for this heartwarming reunion to spawn a light-hearted argument. On one side- me, saying that continuing to drill every-damn-where and ignore the growing untenability of our petroleum-dependent lifestyles might be a bad thing. And on the other side, members of my extended family. Their argument went something like this:

1. You’ll never convince the hard-toiling masses that some distant environmental concerns outweigh their need for cheap gas.

2. Alaska has enough oil to keep America going for like, 200 years. You hear this specific claim all over the place- often with the added factoid that Alaskan wonder-gas would cut our pump prices down to $1.50.

3. Energy independence means the terrorists have one less ball in their court.

It isn’t an overly nuanced take on the issue. But it is a hard one to argue with, if those are indeed the facts. Tens of millions of Americans live paycheck to paycheck. If you’re working construction or landscaping and hauling tools all day in a 14 mpg truck or slinging loads of kids around the suburbs in a 17 mpg SUV, the cost of gas is a big damn concern for you. Theoretical environmental worries don’t come close to real issues, like paying the rent and meeting your health insurance deductible.

So in today’s letter to the conservative parents of the world, I’m going to leave the environmental argument entirely out of it. They don’t much care what happens to ANWR and making that a pillar of any argument isn’t going to get you anywhere. Every claim you make about global warming or ecological ruin will be met by, ‘PEOPLE matter more than BEARS and we need cheap gas to make our economy GO again!’

Instead, let’s focus on their claims, and see if increased drilling really could make some of middle America’s problems go away.

Two hundred years of oil! That’s what we’ve heard is sitting, untapped, up there in Alaska. And interestingly enough, proponents of drilling in Wyoming make the exact same claim about that state’s oil holdings. Apparently we find big, round numbers much more compelling than accurate ones. So let’s fight back with some numbers of our own.

- 19,150,000. That’s the number of barrels of oil our nation uses every day.

- 6,989,750,000 That’s the number of barrels of oil our nation goes through in a year.

- 1,397,950,000,000 Assuming our oil need remains stable (it won’t) that’s how many barrels of oil Alaska would need to be hiding in order to fuel the USA for two centuries.

And finally…

- 29,400,000,000. That’s the highest reputable estimate I’ve been able to find for the number of barrels in ANWR.

You may notice that number is much tinier than the one above it. In fact, ANWR only holds 1/47.5th of the oil we’d need to make it another two hundred years. In other words, all the fuel in Alaska would be enough to run America for 836 days. Two and a half years.

God, things really look different once you have the facts in hand, don’t they?

But hey, so Alaskan oil won’t be able to keep Jean-Luc Picard’s hummer topped off. That doesn’t mean it can’t cause a substantial drop in gas prices for us in the here and now. Smart science-y people are hard at work figuring out an alternative energy solution for the world. But we need to keep the cost of living reasonable while we wait, right? Drill baby, drill still makes sense if you just want to cut down on the cost of living.

And here, of course, is where the ugly, drunk cyclops of truth comes out to take a swing at the hobgoblin of rhetoric. Drilling for more gas does not decrease the price of gas. This isn’t an opinion, it isn’t a theory and it isn’t speculation. This is a fact, based on thirty-six goddamn years of studying the market. Don’t take my word for it- take the word of this gigantic AP study.

“A statistical analysis of 36 years of monthly, inflation-adjusted gasoline prices and U.S. domestic oil production by The Associated Press shows no statistical correlation between how much oil comes out of U.S. wells and the price at the pump.”

Balls on a baker’s forehead. It turns out the whole world is much bigger than America, and it also turns out that petroleum is a WORLD market. Which means the price you pay at Texaco has more to do with global politics, weather and geography than how much drilling we do. The U.S. only makes up about 11% of the world’s oil supply. If we were to increase our production by a staggering 50% (which might not even be possible) it wouldn’t get you more than a 10% drop in prices. And it might not even get that, because Iran could blockade the Strait of Hormuz or a few tankers could crash or a few million more people in China could get cars and we’d be right back to $4-per-gallon gas.

Only, y’know, all the polar bears would be dead and the eskimos would have to move to New Jersey. I know- I promised I wouldn’t bring the environment into it. Let’s jump past that. One source is almost never enough to convince the conservatives in my life of anything. A single study or scientific body can be biased. What if this ‘AP’ is in the pocket of George ‘the Antichrist’s drug dealer’ Soros?

It’s true that a single study could have any number of errors that bias it. But there isn’t just one source to this argument. Experts from the Cato Institute, Yale, MIT, Duke University and the Department of Energy are all in agreement. More drilling does not translate to lower gas prices.

So I’d guess that hypothetical blue-collar worker had better sell his F-150, buy a Prius and invest in a tow-hitch. That’s his best bet at cutting that fuel bill in half.

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15 Responses to ‘Drill, baby, Drill VS Basic Math: A letter to my family.

  1. Chris says:

    I don’t really have anything to add to your insights, I just wanted to say your posts are great and I hope you keep them coming!

  2. Robert says:

    To respond to claims that you’re ignorant about how supply and demand work, you should say that higher US oil production on gas prices has only a very small (even negligible) effect, rather than zero effect.

  3. Martin says:

    As I have no kids, I’m considering America to retire to. The lack of intellectually stimulating company will be a problem, but you people do treat natural resources like a swarm of locusts and I want in on that! Future generations are no concern of mine. I now pay 8 dollars per gallon (more, even, here in ‘Europe’) and I drive a car that is half the size of those barges you all drive because American-sized cars are seen as antisocial here. But never mind all that, I am joining the frat party soon!

  4. joyannaadams says:

    There IS an air car…and air is free. France and Australia are doing work with this. Nobody reports it, or invests in it…BECAUSE…air if free. One guy’s air car can go 150mph.

    And the point is that you don’t want to be dependent on anything from people that hate you. That’s the real point that conservatives should make. Oh..and it’s the Wall Street Traders that keep the prices up more than anything.

    • Michael says:

      When you say “air car” do you mean compressed air? Because compressed air has to be *compressed* somehow and get into the car somehow, both of which are going to require power. As in: there are more electric cars now than ever but most electricity (in the U.S.) still comes from coal, which isn’t free.

  5. incredulous foreigner says:

    LoL @ Air car…
    Also, ever wonder howcome people hate the US? Wouldn’t have anything to do with shooting up their countries in the name of the war on terror/drugs/boredom, would it?

  6. Cashin says:

    Finally, we can have a discussion like adults. The way your blog is written and presented shows you take facts seriously and you approach everything logically. With that having been said I respectfully disagree.

    Nobody’s claiming that we’re going to survive 200 years solely off of Alaskan oil. Even the article you linked summarizes at the end that this is bullshit. Only this Lindsay Williams conspiracy nut job is making this claim. I would argue that AK has a significant amount of oil, but certainly not 200 years worth. But the U.S. as a whole? Well….

    The Green River Shale you mentioned does indeed have enough oil to sustain us for 200 years. 1,800,000,000,000 barrels of oil to be exact. Which is enough for 257 years to be precise. But that’s according to the ridiculous right-wing fringe group known as the Department of Energy.
    http://fossil.energy.gov/programs/reserves/npr/Oil_Shale_Resource_Fact_Sheet.pdf

    And that’s just one formation, if you include the Bakken formation in ND/MT? Offshore drilling? TX/OK oil wells? We’re pretty much set for oil for a very long time.

    Now how is that going to affect the price at the pump? Not at all.

    I’m not even going to disagree with you on that aspect, there are so many variables in a world market that you’re actually correct. A massive increase in production within the United States will lead to a decrease in the cost of gas here at home, but it will be measured in cents, not in dollars. I say this as a conservative who drives a massive 4×4 that barely gets 12 mpg. Be prepared for gas greater than 3.00 for the remainder of our lives. For the reasons you cited above. An important thing you left out though is that the major reason gas prices can’t come down very far is that we’re at peak refining capacity. We could magically add 12349016408123640812365890126578012657095 barrels of oil today, but that’s not going to get turned into gasoline any faster than it is right now. The key is to build more refineries, the last time a refinery was built and opened in the United States? 1976

    “Drilling for more gas does not decrease the price of gas.”

    Which brings us back to the argument at hand. I concede that point, but drilling for less gas, does indeed increase the cost of gas. As several liberal groups push for an end to frakking, stop a major pipeline project, and prevent drilling on federal lands. It leads to a loss of jobs and an increase in the cost of gas in the long run. I would like to see more drilling as a way of increasing jobs (and tax revenue) for a state that wishes to do so.

    • The shale oil debate deserves its own post. And it’ll get one. For now, I’d refer you to this excellent article:

      http://hubbert.mines.edu/news/Youngquist_98-4.pdf

      Key points: We only have rough estimates of the total oil value of those deposits. Due to the difficulties of extraction and the aforementioned refinery ‘crunch’, there is no way of knowing how much we’ll be able to get, how quickly we’ll get it, or how much damage we’ll do to the environment while doing it.

      You are correct: There are jobs to be had in increasing drilling. Just as there are jobs (and lives) to be lost in polluting our ground-water reserves, poisoning our soil and damaging our wildlife. You can’t just gloss over the many, many problems with hydraulic fracturing just because the liberals do not like it. There are severe issues with both the method itself, and the way it is carried out with extremely little regulation and oversight.

      Thanks for your polite, well-researched and reasoned post. I promise, fracking / shale reserves will get its own, much more detailed post. Who knows? I may even come around to your point of view after fracking my way through a few hundred feet of research.

      If you’re interested, here’s a piece I wrote for a UK news site about Fracking a few years back:
      http://news.techeye.net/science/halliburtons-hydraulic-fracturing-will-set-world-on-fire

      • Cashin says:

        I concede, these are indeed just “estimates.” It’s unknown how much oil we’re going to get out of these places. There is a massive difference between “Proven Oil Reserves” and “Total estimated oil” and the litany of other industry jargon terms.

        I could write 21 paragraphs refuting the idea of peak oil and limited reserves, but instead i’ll refer you to this short 4-minute video. It makes my point very well, particularly the idea of “Peak oil” being a joke, and the production value isn’t half bad….for youtube.

        I liked your “Fracking will set world on fire” article a lot. Especially since Dallas is so amazing, I lived in Irving for 8 months.

        I’m looking forward to your shale oil/Fracturing post. I have several comments on that topic but i’ll reserve them for your future article. I don’t like anecdotal evidence but I grew up on the Bakken shelf in North Dakota, now live in Wyoming, and spend most of my summers working in Alaska (Career did not take me where I expected to go, as they always do), suffice it to say I have a bias from the start, but am open to a well made argument.

        I enjoy your blog and have added it to my bookmarks and hope to add to any future discussions (though probably on the other side of them)! Thank God I read about 6-hollywood gun myths!

    • skychase5 says:

      My husband and many, many of our friends who would otherwise be unemployed and losing their homes were saved by getting jobs in the oil drilling industry. It puts food on our table and a roof over mine and my daughter’s head. Your statement about the loss of jobs at the cost of discontinuing drilling is right on. It really is a catch-22 situation but for many, the drilling industry is the very thin thread by which they are barely hanging on. The act of stopping drilling would have such a huge domino effect on so many people’s lives and jobs. My husband doesn’t do the drilling but he contracts out cranes to help with the rig moves. My father owns a business that repairs and inspects cranes and equipment that ultimately get contracted out on rig moves. It isn’t just the drillers that would lose their jobs, it is the people like my husband, my dad, the truckers and the water tank drivers and the pilot car drivers. The maids and hotel owners where the hotels are always packed in the region where my husband works. The grocery store that does quadruple the business since the oil boom hit their location. The waitresses that get tipped nicely by young guys who just happen to have made a decent pay check that week. Heck, even the guy selling the burritos on the side of the road to all the workers would surely suffer. I really could go on…

  7. Paulo Rocha says:

    I usually would agree with you but on this point, I’m a little bit of a evil sadist when it comes to preserving Earth.

    I don’t give a damn about the environment, or the survival of the human kind, or anything of the sort. Overpopulation is, and always will be, the Achille’s heel of the planet and nothing sort of draconic measures of birth control will solve that – and good luck with that. From my point of view, we are doomed, no matter what.

    I believe we should find new ways to artificialy purify the water and air supply, to create transgenic and artificial food sources and so on. In an ideal world, of course I would be all for saving the environment. Alas, this is not a perfect world.

    I’m not using the ‘save people first’ argument, BTW. I’m saying save what can be saved. And unless we start using eugenics and other more horrible ways of birth control and healthcare, we ARE doomed.

  8. ChrisD says:

    We’ve already used draconian methods to bring the birthrate to down to less than replacement in quite a lot of the world and the rest of the world will be there in 30 years. It’s called giving women rights and education and equality. That does the trick. Then we just need to figure out old age care (a solvable problem) and we’re done.

  9. luc says:

    U.S and Canada have no influence over oil prices.

    Since 2005, U.S. oil consumption has fallen by 2 million barrels a day.
    Since February 2009, U.S. oil production has increased 15%.
    U.S. ethanol production is around 1 million barrels a day.
    Canadian oil production continues to grow quickly.
    U.S. is a gasoline EXPORTER…

    But oil is 2.5 times more expensive than in late 2008.

    At the same time, U.S. oil production is on the rise entirely because of shale oil.

    In 2035, in order to replace depleted oil fields, shale oil production will have to triple.
    In 2035, in order to produce as much oil as in 1970 (10 million barrels per day), shale oil production will have to quintuple.

  10. CrudeThreadNecromancy says:

    It’s also worth not only doing the math, but providing perspective. Frankly, to anyone’s reading skills, figures in the millions of barrels are far too quick to make us lose our sense of scale.

    What with mentioning ‘drill, baby, drill’, it might be useful to segue over to another moment from the 2008 campaign – when, at one point, campaigners sent out mass-mailings of tire pressure gauges mockingly labeled, “OBAMA’S ENERGY PLAN!” lampooning a recent statement of Obama’s – he’d recently, when fielding a question from an audience member about ways individual citizens could do their part towards energy sustainability, suggested ‘checking your tire pressure.’

    Ironically, actually checking your tire pressure and adding air actually does save a significant amount of gas – and unlike adding to the supply by drilling more, that will actually affect how much your Jane Q Public has to spend at the pump. And unlike Priuses, most of us with cars can afford a tire gauge. How much gas is saved – well, let’s just say that when Factcheck.org evaluated the counter claim that Obama’s tire pressure suggestion would save more gas than expanding offshore oil drilling, it came to a split decision, because “Motorists could save more than 1 billion gallons of fuel a year, right now.” [ http://www.factcheck.org/2008/08/the-truth-about-tire-pressure/ ] Offshore drilling could produce more in the long-term, of course, but there’s a reason Cracked is writing articles suggesting we wage war against BP instead of tire pressure gauge manufacturers, mainly that they don’t cause tens of billions of dollars in damages to our economy when they fuck up catastrophically.

    There’s also a major reason shale oil hasn’t already been exploited as all hell – sure, there’s tons of it, but it can be pretty damn costly to go from “huge deposits of ‘shale oil’” to “millions of barrels of gasoline.” You can’t use shale oil to get gas down to three dollars if it takes four to produce a gallon of gas from shale oil. As technology improves, it will get more economical, but coal mining has too; that doesn’t mean it’s actually a fantastic resource to use.

    And given that the oil market is NOT free but an oligopoly – if you want to challenge me here, go ahead and try to found your own oil company; you can’t due to the prohibitive entry costs – increasing domestic production does nearly fuck-all for the consumer, as you’ve pointed out, and no amount of drilling will change that. We cannot ‘fix’ our oil dependency and lower the amount we need to shell out for gas by increasing supply; we must do it by decreasing demand.

    The notion is frankly backward in the first place. Oil companies do not exactly need our help to flourish. They’re already doing that beyond the wildest dreams of Scrooge McDuck – hence the whole ‘windfall profits’ we tried to tax? Easing regulations on oil companies, opening up new places for them to drill, tossing them even more billions of dollars in subsidies as encouragement – these things are only needed when the industry in question *isn’t profitable enough to make money,* or lacks the capital to get off the ground, like your personal oil start-up that will never produce a barrel. As is – they just make their bank rolls even more obscene than they’ve already been.

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