With several sources and a report by the Energy Information Administration (EIA) saying that increased drilling will not have a significant impact on oil prices, what should we do? I think we need a comprehensive approach to this problem: increase production, decrease consumption, research and develop alternative feul sources and crack down on market manipulation. We really need a short-term, middle term and long term solution.
With respect to oil production, I think that it is too soon to tell what the impact of increased production will be. First of all, we can only speculate on how much oil there is to be found. The EIA Report was based upon the belief that offshore drilling and drilling in ANWR may produce something like 75 billion barrels. But how can we know how much oil there is if we do not undertake exploration? We really need to understand the situation before we can come to that conclusion. Also, as I understand it, the effects of increased production are open to debate. It seems clear to me that increased production along with decreased consumption will necessarily have an impact on supply and demand.
As to environmental concerns, I think this is not a sufficient explanation either for refusing to allow drilling. We are willing to let our neighbors drill for oil under conditions that we have no control over while we are unwilling to allow oil drilling off of the coast and in ANWR because it could conceivably have an impact on the environment. With strict controls in place, we are in a position to control the environmental impacts if we allow drilling here.
As for viable alternatives, we need to explore oil shale, nuclear energy, biofeuls, wind, solar, etc. First, oil shale. If we can tap into this resource it will offer more oil than all of the other reserves in the world combined. The only potential downside is on the environment. However, in the last several years, the environmental impacts have lessened as a result of advances in technology as well as state and federal regulations. (See http://www.fossil.energy.gov/programs/reserves/publications/Pubs-NPR/40010-373.pdf) While I do question the precise impacts that remain, it is my understanding that an Environmental Impact Report is currently being prepared by the government. We should wait until we have that report in hand before we make any decisions but, at least for now, it remains a viable alternative.
We also need to go nuclear. Fears of a nuclear meltdown are outdated and very unlikely. The last “meltdown” was in Russia likely using 1950s technology. The industry has evolved such that we are now able to dispose of the waste with little impact on the environment and have gotten to the point where there is little risk of a nuclear accident. As proof of this point, 80% of France’s power comes from nuclear energy. If France can do it, why can’t we?
With respect to the other alternatives to oil, I think we must provide incentives for their research and use and figure out a way to use ethanol without driving up the price of food.
And finally, we must decrease our consumption of oil. We must incentivize the development of vehicles that are electric, hybrid or use alternate feul. I love McCain’s proposal to “inspire the ingenuity and resolve of the American people by offering a 300 million dollar prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.” I also like his plan to provide a $5,000 tax credit for any purchaser of a zero-emissions vehicle. So far, I have heard little in the way of solutions from Obama other than to heavily subsidize corn production for ethanol while imposing stiff tariffs on the import of sugar based ethanol and opposing offshore drilling and in ANWR as well as nuclear energy.
Without implementing all of these programs, we will have little chance of becoming energy independent.