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The Energy Policy Morass

‘Think, Baby, Think’

Apr 26, 2010, Vol. 15, No. 30 • By STEVEN F. HAYWARD
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Here emerges one of the most glaring insincerities of the energy debate: While it is neither realistic nor sensible to attempt to produce all of the oil we need from domestic sources (more on this in a moment), we could easily produce enough additional domestic oil to replace all of our current imports from the Persian Gulf, i.e., the “people who hate us,” probably from new fields in Alaska alone. Expand production from the outer continental shelf, and we could nix imports from Venezuela (currently about 10 percent of our oil), too. Drilling opponents often argue that oil from Alaska’s Arctic National Wildlife Refuge (ANWR) would amount to only six months’ worth of U.S. oil consumption. This is superficial logic, akin to arguing that the farms of Iowa only produce six weeks’ worth of food for American consumers, so why bother planting. While no one knows how much oil may be located in ANWR until serious exploration is undertaken, even a “six-month” field would be substantial. The average oil field may represent only a few weeks worth of total oil consumption, but oil fields aren’t produced all at once. Rather, they are pumped out over several decades.

We’ve done it before. The surge in North Slope oil in the early 1980s enabled us to reduce oil imports by 2 million barrels a day. Oil imports from the Persian Gulf plummeted from 2.2 million barrels a day in 1978 to a low of 311,000 barrels a day in 1985. North Slope production has been steadily dwindling since its 1988 peak; today North Slope production has fallen to about 650,000 barrels a day. Since the 1980s oil imports from the Persian Gulf have risen in almost exact proportion as North Slope production has fallen. Today we are back to importing about 2.3 million barrels a day from Persian Gulf nations, about 13 percent of our consumption. 

One remarkable fact is that American oil consumption has remained virtually flat over the last 30 years. Today, we use only slightly more oil than we did in 1978, even though the economy has more than doubled in real terms. This is testimony to the steady improvement in energy efficiency over the last generation, including—yes—our cars and trucks. Since 1975, energy consumption per dollar of economic output has fallen 50 percent. Though efficiency and conservation measures are beloved of environmentalists, it is doubtful any of the government’s manifold mandates, tax incentives, or direct subsidies have made a significant difference in the overall trend of energy efficiency in the United States. The basic market drivers—higher energy prices and expanding profits through resource efficiency—account for most of the improvement. So when we hear the handwringing about our growing dependence on foreign oil, now over 60 percent of our total oil consumption, we should be clear that this trend is entirely the result of declining domestic production and not any soaring demand for oil. Domestic oil production has fallen by more than 1 million barrels a day over the last 10 years. The United States now produces less oil than it did in 1947. This is pathetic. And unnecessary.

The two main reasons oil and other fossil fuels became environmentally incorrect in the 1970s—air pollution and risk of oil spills—are largely obsolete. Improvements in drilling technology have greatly reduced the risk of the kind of offshore spill that occurred off Santa Barbara in 1969. There hasn’t been a major drilling related spill since then, though shipping oil by tanker continues to be risky, as the Exxon Valdez taught us. To fear oil spills from offshore rigs today is analogous to fearing air travel now because of prop plane crashes in the 1950s. Technology has similarly put us on the path to virtually eliminating air pollution from fossil fuel use. Since 1980 we’ve reduced tailpipe emissions from cars by 98 percent, with corresponding nationwide reductions in ambient ozone (–22 percent), carbon monoxide (–77 percent), and lead (–92 percent). The same is true for coal: Since 1970 we’ve doubled the amount of coal burned to generate electricity (a consequence of the successful environmental campaign to shut down nuclear power development in the 1970s), but sulfur dioxide emissions have been cut in half, with more improvements to come.

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