Friday, September 12, 2008

Drill, Baby, Drill!

If one phrase can describe last week’s Republican Convention, it would be “drill, baby, drill!” This past weekend, I was talking with a family member who told me that this was a dumb slogan, and asked me whether the Republicans really wanted the delegates who chanted this slogan representing the party. I responded to this question by saying that if I had to choose between an allegedly dumb slogan and gasoline at $4 per gallon, the slogan will win any day.

Americans are tired of high energy prices. High gasoline prices and heating oil are straining Americans’ pocket books, and diverting spending away from other goods and services. These high oil prices also drive up the price of agricultural production, which in turn, has contributed to the cause of high food prices.

Many on the left have blamed these rising prices on the current Presidential Administration and “big oil.” They argue that “big oil” is scamming the American people by pricing oil too high in order to increase their profits. The Administration, with their close ties to “big oil,” is the enabler.

What’s funny is that the same people who claim that the oil companies are ripping off the American people by pricing oil too high also are rabidly opposed to increasing the supply of oil by allowing oil companies to drill offshore and in the Arctic National Wildlife Refuge (ANWR). This position is sorely mistaken.

This past week, Deborah Thornton, a Research Analyst at the nonpartisan Public Interest Institute of Mount Pleasant, Iowa, released an article titled, “The ‘Drill Nothing’ Congress and Bubbling Crude.” The article effectively made the case for drilling offshore, and dispelled the myths perpetuated by the opponents of drilling.

Thornton, in her article notes that, while the U.S. currently produces 8 million barrels of oil per day, the number could be increased by 3 to 4 million per day if it taps the estimated 89 billion barrels available offshore or the 10 billion barrels contained in ANWR. The price impact of this increased production could decrease the price of gasoline by nearly $2 per gallon.

Of course, there is the oft-repeated line that if we start drilling, no effect will be felt until ten years down the road. While this line is akin to saying that a person shouldn’t save for retirement because the effects won’t be realized until 40 years (or if you’re of my generation, 50) years down the road, Thornton blows it out of the water. In a market where the price today is based upon the future price, the possibility of increased production will effect the price paid today. As Thornton points out, prices fell from $34 to $11 per gallon within five years, when President Reagan removed domestic oil controls. The opposite effect occurred when President Clinton rejected ANWR drilling in 1995.

There is also an oft-repeated argument that more drilling will create more environmental harm. Again, Thornton addresses this issue head-on by stating that three out of five times, oil pollution is caused by natural seepage, rather than by oil companies. Additionally, despite the fact that oil transport has increased, the number of oil spills has decreased.

This November, many Americans will be driving to the polls. Their vote could determine whether the price they pay at the pump is $4 or $2. If they want to pay the latter price, then they will be wise to cast their ballot for the candidate who is not afraid to say, “drill, baby, drill!”

By W. Sherman

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