There would be no price impact at all until 2020 and only 3 cents to 5 cents a gallon in 2030.
posted at 5/7/2011 1:01 PM EDT
Are you falling for the drill baby drill political game the right is playing?
With the country again facing $4-a-gallon gasoline, the time would seem ripe for a grown-up conversation on energy. What we are getting instead is a mindless rerun of the drill-baby-drill operatics of the 2008 campaign, when gas was also at $4 a gallon. Then, as now, opportunistic politicians insisted that vastly expanded oil
drilling would bring relief at the pump and reduced dependence on foreign oil. Then, as now, these arguments were bogus.
As President Obama
observed in a March 30 address on energy issues, drilling alone cannot possibly ensure energy independence in a country that uses one-quarter of the world’s oil while owning only 2 percent of its reserves. Nor can it lower prices, except at the margins. Only coordinated measures — greater auto efficiency, alternative fuels, improved mass transit — can address these issues.
Still the oil industry and its political allies persist in their fantasies. On Thursday, the House passed the first of three bills that will require the Interior Department to accelerate drilling permits without proper environmental or engineering reviews, reinstate lease sales off the Virginia coast that were canceled after the BP blowout, and open up protected coastal waters — East, West and in Alaska — to drilling.
The bills would make regulation of offshore drilling even weaker than it was before the spill. They would also do almost nothing to solve the problems of $4-a-gallon gas.
Here’s the hard truth: Prices are set on the world market by the major producers, OPEC in particular. Even countries that produce more oil than they need, like Canada, have little leverage. Canada’s prices track ours.
The Energy Information Agency recently projected what would happen if the nation tripled production on the outer continental shelf. There would be no price impact at all until 2020 and only 3 cents to 5 cents a gallon in 2030.
By contrast, the agency found, raising the fuel efficiency of America’s cars would do real good. Increasing the fleetwide average from roughly 30 m.p.g. today to 60 m.p.g. in the next 15 years, an ambitious but not implausible goal, could bring prices down by 20 percent.
Some politicians get it. Senator Max Baucus, a Montana Democrat, is drafting a bill that seeks to repeal $4 billion in annual taxpayer subsidies to the oil industry and use the proceeds to develop more efficient cars and alternative fuel sources. Mr. Obama has tried twice, without success, to get rid of those subsidies, and the House voted in March to preserve them in the current budget.
The tax breaks — fast write-offs for drilling expenses, generous depletion allowances, and the like — may have been useful years ago but are wholly unnecessary when oil prices and industry profits are reaching new highs.
Even John Boehner, the Republican leader, conceded in a recent ABC News interview that oil companies “ought to be paying their fair share.” When horrified aides reminded him that ending the subsidies would amount to a tax increase — anathema among Republicans — he backed off.
Repealing these breaks would reduce the deficit and yield revenues to be invested in cleaner fuels, while having no real impact on prices. Mr. Obama may not be able to persuade the House of these simple truths. But he can and must seize whatever opportunities are offered in the Senate, involving himself, not just rhetorically, in the hard but necessary struggle for a sane energy policy.