Sunday, June 22, 2008

The Drilling Farce


The second half of this week has been dominated by Republican demands that moratoriums on drilling off the shore be lifted. Specifically, John McCain said that each state should be allowed to choose whether to allow drilling. President Bush followed with a similar argument with a specific call to open ANWR (the Arctic National Wildlife Reserve).

These calls are misguided and they are simple attempts at providing quick fixes. This would not be the first time that McCain has engages in political solutions to economic problems. It would help to remember that John McCain was the first person to call for the silly lifting of the Gas Tax which would increase demand, increase prices and save consumers a possible 30 cents per tank. While the savings would help tankers and taxi drivers, the fact that the price would rise due to increased demand would hurt everyone. As CNN reported:
Along with Barack Obama, many economists largely dismissed the notion of a gas tax holiday as a political ruse that would do little to lower prices
Similarly, this call for drilling looks good, but it does not achieve real solutions.

First, it should be noted that oil companies are currently sitting on 68 million acres that they are not using. Representative Rahall has introduced a "use it or lose it" bill that would force oil companies to develop the land that they currently hold. Additionally, there are 33 billion acres offshore they have not developed. If they do not use them, then why in the world should we open up sensitive land when they don't use the land that they have?

On another note, federal analysts from the U.S. Energy Information Administration have said that any new oil drilling would take 10 years to see results. John McCain's "solutions" would have no effect (expect maybe psychological) on gas prices for at earliest 10 years (others project no price difference until 2030). We should use those 10 years to wean ourselves off of our "addiction" to oil and work towards energy sustainability and independence (and there are many good ideas that we could use).

Grace Kelly has an some analysis further showing that even if we doubled drilling instantly there would be no discernible effect. As the blog reports:
Today, this very day, if all US Offshore Drilling was doubled, it still would NOT make a difference in gas prices. The bottleneck in processing oil is refinery capacity. We know this because every spring and fall, when refineries shut down to transfer processes and do small maintenance, the gas prices spike. Don't believe me, yet check out the evidence below the fold.
Read the blog for much more information on the problems with refinery bottle necking.

Also John McCain stole one of Obama's slogans. As anyone who has been following the news knows, one of Obama's more popular slogans was "Change we can believe in" (see right). McCain's campaign couldn't think of anything of their own so they changed one noun, one pronoun, and added an article for its new slogan "A Leader you can believe in," and their blog "A Blog you can believe in." I think they're drawing an unfavorable comparison.
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cross-posted on Poli-Think

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