Today in Triumphs of Ignorance: Obama's Drilling Decision

Politics aside, on the policy merits the Obama administration's decision to "expand oil and gas development and exploration on the U.S. Outer Continental Shelf (OCS) to enhance our nation’s energy independence" is absurd. There is no such thing as "energy independence." Nations that produce a lot of crude oil are not immune to concerns about political instability in other oil-rich nations. Sure, Saudi Arabia may not need to buy oil from Iran, but it depends on oil revenue. Oil revenue, in turn, is determined by the prices set in the international market. So the Saudis have, if anything, even more of an investment in making sure oil supply is not raised or decreased to the detriment of their ideal price point.

Oil, you see, is a fungible global commodity. The oil that one drills for in Texas powers a car the same way that oil from Kuwait does. So the price that Texans pay for oil is determined by global supply and global demand, not how much oil is drilled on the Gulf Coast.

In a market economy such as ours, opening an area for drilling does not mean that the U.S. government controls its destination. Shell and Chevron will be perfectly happy to sell their oil to China if Chinese drivers are willing to pay more than Americans. The U.S. could produce exactly as much gasoline as it consumes and it would still feel the effects of, say, a decision by Hugo Chávez or Vladimir Putin to stop selling any oil. If global supply drops precipitously, global prices will rise, and unless we plan on nationalizing the oil industry—a move I doubt either Democrats or Republicans will endorse—the fact that we are drilling for more oil near our shores won't protect us from the price shock.

The only extent to which increased U.S. production reduces America's sensitivity to oil supplies from abroad is the extent to which U.S. production increases the global supply. If the United States were capable of increasing global supplies of crude oil by so much that it could cut prices for decades to come, then it would be less vulnerable to price shocks, though by no means invulnerable. Whether it would be desirable for us to drill for that oil in such a scenario, in terms of both the immediate environmental costs of drilling in sensitive areas and the contributions to global warming from burning said oil, is a value judgment on which liberals and conservatives generally disagree. And that's how Senate Republican leader Mitch McConnell wants to frame the issue, calling Obama's proposal “a step in the right direction, but a small one that leaves enormous amounts of American energy off limits.” Republicans are obviously betting that Americans would rather pollute the environment to pay less for gasoline, and they would probably be right.

But that isn't actually the scenario we live in. There are not "enormous amounts" of energy being left off limits. America, as Obama himself noted, has "less than 2 percent of the world’s oil reserves; we consume more than 20 percent of the world’s oil." McConnell's claims are thus blatantly false. There are not, relative to current world demand for energy—never mind future demand—"enormous amounts" of American energy that will be left untapped by Obama's decision to keep some sensitive areas protected.

Since producing a slightly greater percentage of the oil we consume is irrelevant, the only argument for drilling would be that it will reduce prices globally. Seems pretty unlikely when you've got only 2 percent of the world's reserves. But just in case you weren't sure, the U.S. Energy Information Administration produced a study last year that found "the projections in the OCS access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030."

So why open up anywhere to drilling at all? The answer is pure politics. And while it may or may not be shrewd politically, there is no objective basis for this as national energy policy on its own terms. Maybe, as Jonathan Alter suggests, it can be rationalized as a way to create jobs. But then Obama should just come right out and say so.

You can see our photo galleries on whether President Obama has fulfilled his promises and on the worst man-made environmental disasters here and here.

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