House Passes Offshore Drilling Legislation, But It Won't Lower Gas Prices at All
This afternoon, the House passed legislation that will fast-track lease sales for offshore oil production.
According to E2-Wire, the Restarting American Offshore Leasing Now Act would "set a deadline for holding delayed Gulf of Mexico oil and gas lease sales. It would also mandate the sale of leases off the Virginia coast, a plan the administration nixed after last year’s Gulf oil spill."
The first of three pieces of oil and gas drilling legislation being pushed by GOP leadership, it's being sold as a way to ease the burden of $4 per gallon gas.
“We’re in this situation because of this administration’s policies that have shut off energy supply,” Steve Scalise, the Republican representative from Louisiana, said.
He was totally wrong.
If we were to pursue the most aggressive possible plan of offshore drilling, the most we could reduce gas prices, compared to completely freezing all new leases forever, would only be $0.05 per gallon. In 2030.
Here's the chart I created playing with the EIA's Annual Energy Outlook. You can get more details in my earlier post. Basically, the green line is the price of gas if we drill the hell out of offshore wells (three times what we're currently producing); the purple line underneath it is the price of gas if we never sell another offshore drilling lease; the light blue line, which is almost impossible to see, is the business-as-usual case.
As I wrote before:
If it looks like there's just one line there, that's because the three lines are virtually right on top of each other. Whether we dramatically expand offshore drilling or stop selling offshore drilling leases entirely, there will be essentially no impact on the price of gasoline until 2020. If we look out as far as 2030, the difference would only be $0.05—$3.59 per gallon as opposed to $3.64 per gallon. The idea that offshore drilling would significantly ease the pain of high gas prices is a canard.
You don't need to take my word for it. Watch Doug Holtz-Eakin, the White House’s Chief Economist under George W. Bush, tell Chris Matthews that "you can't change the oil price very much with the U.S. exploration."
The only thing that Holtz-Eakin is wrong about is his last line. Not everyone's being honest about that.