Offshore Drilling Won't Lower Gas Prices
If you think that dramatically expanding oil drilling in U.S. offshore waters is going to reduce the pain you feel when filling up at the pump, you might want to contemplate the graph below, courtesy of Ben Jervey at GOOD. Using data from yesterday's "Annual Energy Outlook" from the Energy Information Agency, Jervey graphed the EIA's projection for gas prices over time under various scenarios, showing that fuel-efficiency yields lower prices than massive drilling.
Here's how to read the graph. Light Blue = no new offshore drilling. Dark Blue = a massive expansion of offshore drilling. Green = a 6% increase in fuel economy in cars every year from 2017 to 2025. Purple = a less ambitious 3% annual increase in fuel efficiency over that period. (Click on graph for larger display.)
First thing to note: Massive expansion of offshore drilling makes virtually no difference in gas prices until about 2024, and by 2030 yields a difference in only 5 cents a gallon. Even if your only concern was in reducing gas prices, you'd be much better off increasing automotive fuel efficiency: Under the 6% per year scenario, by 2030 you'd have gas that was 20 cents cheaper than if you did nothing, and 15 cents cheaper than if you despoiled the nation's offshore waters.
In short: increasing the gas mileage of American cars is a far better way to cut gas prices than drilling.
If you think about it, this all makes some intuitive sense. The U.S. consumes roughly one-quarter of the world's oil, but holds only 2 percent of the world's oil reserves. So, a far more effective way to reduce gas prices is to address domestic demand than supply. In other words: make vehicles more fuel efficient, and increase energy efficiency incentives.
So it's been a good day: President Obama took care of the birthers, and GOOD took care of the "drill here, drill now" crowd. Next issue, please!