OK, it's time to write something about offshore drilling. When it first came into the spotlight I thought it would quickly disappear. But, it has proven to be a valuable election campaign tool, especially for McCain, with public emotions running high. Perhaps now that the oil price is coming down this issue will not have a strong appeal for much longer.

Promoting offshore drilling will not do anything to reduce the price of gasoline in the US. Certainly not in the short term as production will not come online for another 10odd years, but also not in the long term. Oil prices are driven globally, partly by supply and demand on the world market and partly by oil futures speculation. I do not like to guess what percentage of the current oil price is driven by speculation rather than actual market forces, but it is clear that part of the recent strong ups and downs in oil prices was driven by the latter. However, increasing demand on the world oil market is the prime driver. Countries such as China and India are increasing pressure on the market, and oil demand in other countries has not leveled off let alone declined.

The USA consumes on average around 7 billion barrels of oil per year, importing much over half of this volume. Expanded offshore drilling could give us only a small percentage of this, less than what improved CAFE standards would establish, for example. Compared to the world consumption of around 30 billion barrels US offshore drilling would certainly be small fry.

Let's look at some numbers for the Outer Continental Shelf (OCS) of the lower 48 states. This is the area most debated. Mean estimates from the Minerals Management Service are if the current restrictions were lifted, potentially an additional 18 billion barrels of crude oil and 77 trillion cubic feet of natural gas could be accessed. Production would of course take place over many years, and would ramp up only slowly with first production expected not before 2017. In 2030 the extra production is expected to be only around 7% of the current base scenario: 2.4 million barrels per day rather than 2.2: we really are talking about small volumes compared to are daily consumption of 83 million barrels per day worldwide. Because oil prices are determined on the international market, it is clear that any impact on average oil prices is expected to be insignificant.
The question is therefore not whether offshore drilling could alleviate our pain at the pump, and whether it should even be considered as a plaster: this plaster won't stick.

However, oil reserves in easy to get to and cheap to produce places are not as plentiful as they once were. Hence the drive to hostile environments, such as offshore and in the Arctic, to satisfy current world oil hunger. This is happening not only in the USA but worldwide. The oil industry is also increasingly exploring and producing other nonconventional oil reserves including tar sands and shale oils. If I had to make a choice between either allowing offshore drilling or production of tar sands, I would probably choose offshore. In my mind, the increasing production of heavy oils, and in particular the tar sands, are the biggest environmental worry in the land of oil production.

As long as demand in the world oil market increases or stays level, there will be a movement towards exploring and producing new oil resources. The political answer is not to argue about offshore drilling, but to push for long lasting measures that reduce the need for nonconventional oil production.

If we want to alleviate pressure in the oil market, there is really only one answer: reduce demand. With the US consuming so much of the current available oil, we are a very good candidate for efficiency.
Let's fight about that, campaigners.

See also what the Energy Information Administration published on this issue.