Friday, June 20, 2008

Offshore Drilling Numbers

Economist Dean Baker wades into the noise about the newly-reborn offshore drilling controversy and notices something:

I haven't seen any analysis of the tradeoffs in the reporting thus far. After all, why use numbers when we can say that this is just a question of values -- the environment or cheap energy?
Baker then proceeds to offer a set of numbers to attach to this question, which he admits are rough:
In today's prices, we would be looking at a drop in the price of a barrel of oil from around $135 to $131. If this were passed on one to one in gas prices (this is long-run story), we might expect to see a drop in the price of a gallon of gas from around $4.00 to around $3.92 a gallon.
Eight cents per gallon -- and not tomorrow, not next week, not next year, but in thirty years.

Baker's calculations may or may not be right, but he is definitely asking the right questions and addressing them in a responsible, informative way. Heading into the presidential campaign, will we see this treated as the empirical question it is, or will we see it framed solely as an unhelpful "values" debate?


Laura said...

The environmental impact of using fossil fuels doesn't justify offshore drilling, even if it leads to substantially cheaper oil prices. The only smart move right now, in my opinion, is developing environmentally-friendly alternative energy sources like solar. It should've been done back in the Nixon era. But when the people running the country have substantial investments in the oil industry, the wheels of change grind exceedingly slowly.

Mike said...

Obsidian Wings had a post on this with a link to an Energy Information Administration report saying 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."
That's if it were opened up tomorrow.