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Oil Drilling / Gas Crisis

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Four day work weeks, carpooling, canceled vacations… the rising cost of gas is affecting everyone from business and government to everyday citizens. Will off-shore drilling bring a reprieve? Is it the answer? How did we get here and where do we go now? {exp:weblog:entries weblog="polls" show_future_entries="yes" show_expired="yes" entry_id="561" dynamic="off"} {exp:lg_polls:poll entry_id="{entry_id}" precision="2" return="http://www.scetv.org/index.php/the_big_picture/show/oil_drilling_gas_crisis/"}

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In-Depth

5 Questions with John Hofmeister

Former President of Shell Oil / Founder and CEO of Citizens for Affordable Energy

1 – Will gas prices ever go down substantially? Gas Prices: As high as current prices are, they could be higher. Due to diminishing demand, gasoline manufacturers are operating at reduced margins today and are not passing through the full cost of higher crude prices. If demand diminishes further, or if overall crude demand drops, or if new supplies come onto the market, or if geo-political tensions ease, especially in the Middle East or Nigeria, or Venezuela, it is possible that crude prices and subsequently gasoline prices could drop from today's levels. On the other hand if tensions increase, supply diminishes or demand increases, we could see even higher prices than today. This dependence on foreign crude oil literally has the US "over a barrel". Only if we supply more of our own crude in the coming years will the US be less vulnerable to such uncontrolled price vulnerabilities.

2 – How much oil is there in this country to be drilled? The American Petroleum Association estimates that there are more than 110 billion barrels of off limits crude oil and natural gas on Federal lands and the Outer Continental Shelf of the US. This is in addition to the tens of billions of barrels that companies carry in their reserve base. These numbers do not include the estimated 1 trillion barrels of oil and gas locked in oil shale in Colorado, Wyoming and Utah. The US has considerable oil and gas resources. We are not running out; we are running out of access due to government restrictions.

3 – Can you drill without having an affect on the environment? Drilling must meet extensive engineering requirements that include environmental safeguards, as well as federal and state land, water and air regulations. The science and technology for safe and efficient drilling has evolved over the years. Companies are held accountable for achieving environmental as well as production results by their shareholders, managers and regulators.

4 – What's the tipping point for the price of gas and alternate energy? The tipping point varies from alternative to alternative, although coal, natural gas and oil remain the most affordable sources of energy today. Bio-fuels are nearly competitive with today's gas and diesel prices, although they still carry a tax subsidy to be as affordable. Hydrogen fuel cell vehicles, although now in the test market, are not yet commercially affordable. Plug-in hybrids are receiving a lot of attention, although the fully loaded costs, including the potential of carbon cost constraints due to pending carbon dioxide emissions constraints are not yet known.

5 – What must be done for the United States not to depend on the Middle East for oil? If the US committed itself to an energy security strategy that over the next ten years resulted in an increase in domestic production of some 3 million barrels of crude per day, increase in bio-fuel production and use of some 2 million barrels per day, and managed to reduce demand by some 3 million barrels per day due to higher mpg results or less driving, the US could conceivably meet most of its import requirements within this hemisphere, relying on Canada, Mexico and Brazil, in addition to our own crude production. Whether the US wanted to cut itself off from Middle East supplies entirely is an important issue for international relations. There are many trusted trading partners of the US in the Middle East. We may be better off to retain such partners over the longer term.

Additional Resources

Coastal Conservation League
www.CoastalConservationLeague.org

Citizens for Affordable Energy
www.citizensforaffordableenergy.org