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Posted by: Dan McGrath 8/19/2008

Oil Myths BustedPrices at the pump remain at record highs and Minnesota Majority has joined the chorus of demands for Congress to act. With soaring fuel prices and increasing demand, it’s well past time Congress listens to the American people and begins to dismantle the road blocks Congress itself put in place to obstruct access to our own abundant natural resources.  Despite the rhetoric coming from our elected officials about easing the pain at the pump, energy independence and taking the strain off of family budgets, our congressional leaders have done nothing to reverse the problems created largely by congressional policy.

Lately it seems that our representatives in Washington are all political spin versus taking meaningful action. Excuses and blame are elevated to a high art form in modern beltway politics. Some of the myths perpetrated by congressional leaders by way of defending their grossly irresponsible inaction on American energy issues have made their way into the mainstream consciousness.  One of the biggest myths about expanding access to American oil reserves is that it wouldn’t make any noticeable difference. Opponents of abundant American energy claim that even if ANWR and the outer continental shelf were opened up for drilling, the oil wouldn’t enter the market for ten or more years and the effect on fuel prices would be negligible or nonexistent.

Another common meme is that oil investors speculating on future scarcity are the driving force behind high prices. These two notions cannot harmoniously coexist. If speculation on future scarcity is driving up the price of oil, how can it be that future abundance wouldn’t bring prices down? The truth of the matter is that oil speculators are cashing in on high prices, but they can only do so because supply is artificially limited by congressional policy. It’s the restrictions on accessing domestic oil that creates the scarcity. Immediately following the president’s announcement that he was lifting the executive ban on offshore drilling, gas prices began to drop, because it became that much more likely that supply would be increased. The closer we get to tapping more of our own resources, the more the price will fall, before a drill bit even touches the ground in expanded access sites.

Defenders of do-nothing policy are also fond of parroting the notion that oil companies aren’t using the leases they already have. Supposedly, after paying hundreds of millions of dollars in rent, and investing in equipment and exploration, Shell is sitting on thousands of idle acres of leased land where they could be producing oil. Again, it’s a game of deflecting blame and the easy target is big bad oil companies. This is simply not true. And with oil prices at an all time high, it doesn’t make sense, either. If Shell could get all this supposedly untapped oil out to market, they’d stand to make even bigger profits than they already are. Buy low. Sell high. Simple market economics dispels this myth, but some additional facts may bring more clarity. The Interior Department’s Mineral Management Service reports that there are 7,457 active leases for oil drilling. Of those, 1,877 are classified as producing. That doesn’t mean oil isn’t flowing out of the remaining 5,580, or that drilling and exploration isn’t underway at those sites. To be deemed producing, a site must be producing 130,000 barrels of oil per day. It takes time to ramp an operation up to that capacity, and the process is underway on all leased sites with known deposits of oil.

The argument that lifting the drilling ban wouldn’t have any effect for a decade is false, but even were it true, it’s a ridiculous, short-sighted argument. Using their own premise, if we’d lifted the ban ten years ago, we’d have that oil today and wouldn’t be in such a dire energy crunch now and ten years from now, we’ll still need oil.

A couple incidents that occurred decades ago have lived long in the American psyche. One is the 1979 Three-Mile Island nuclear reactor partial core melt-down. That incident unfortunately happened just a few weeks after the release of The China Syndrome, a disaster movie about a nuclear power plant melting down. This helped usher in a ban on new nuclear power plants. A new one hasn’t been constructed in the US since while France and the rest of the world leap ahead of us in nuclear technology. The other incident was an oil spill caused by an offshore rig back in 1969.

When offshore oil rigs were new technology, operators didn’t have a grasp on the environmental hazards posed by bringing up oil from beneath the ocean floor. An accidental spill resulted in 80,000 barrels of oil washing up on the coast of Santa Barbara. Everyone has seen the footage – probably more than once. That was just about forty years ago, and thanks to advances in technology and safety protocols, such a disaster hasn’t happened since. Regardless, the myth persists that offshore drilling is environmentally destructive. The truth is modern oil rigs are equipped with automatic shut-off valves beneath the ocean floor. Should an accident or damage to the rig occur, the oil in the well is safely capped off so virtually none escapes into the seas. There are backup protocols as well and oil companies are required to constantly rehearse and demonstrate competence in containing any possible oil spill.

These are some of the myths being used as excuses to do nothing that would truly increase domestic oil supplies. There is a strong element in our society and in our government that wants gasoline to be prohibitively expensive. They envision a carbon-free solar and wind powered utopia of extreme conservation among the masses. Affordable, abundant energy such as is needed to power our homes and our economy run counter to their vision for us. Excuses are useless. Americans need leaders who will act, and act in the best interests of their constituents. The American economy is the most productive in the world and the engine of that economy needs fuel. Someday we may be powering our factories and automobiles with hydrogen or another kind of energy, but the truth is right now, we need petroleum. We have it. It’s time for Congress to let us go get it.

Take ActionTell Congress to cut the excuses and increase domestic oil production by signing the ActNowOnEnergy.com petition and sending a direct message to your elected officials.

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November 23, 2008
 
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