Increased drilling won’t deliver oil for another decade
August 12, 2008
To the Editor:
I have a difference in facts with Bill Hamilton’s assertion that the reason for the drop in oil futures is due to a presidential statement. If that’s the fact, I wish he’d made the statement earlier and hope he makes more in the future.
The facts are twofold: 1) U.S. demand for gas is down 3.5 percent for June/July as Americans reacted to higher gas prices; and 2) the recent stabilizing of the U.S. dollar. The dollar’s demise has been a critical factor in the price of gas.
Since 2000 the dollar price for a barrel of oil has increased four times, while in Euros it has doubled. If the dollar had held par with the Euro, gas would be about $3 a gallon. The drop in the dollar is accountable to two factors: 1) our trade deficit and 2) the steady rise of our federal deficit, which has gone from $5.8 trillion to $11.4 trillion ( up 96.6 percent) under the borrow-and-spend policy of the present administration.
As for American drilling as a way out of our current problem, I’m for drilling, but as one of those “speculators” I know a bit about timeframes.
Offshore ” two to three years to test (this is uncharted), another two years (fast track) submitting plans to state and federal energy departments, and environmental impact. Platform construction – these are not off the shelf, it’s like building an aircraft carrier (they float), and all are specifically engineered to site, taking three to four years.
Now you drill, where do you put it? You have to build pipelines, tank farms and develop a distribution system. Who knows how long it will take to get that through all the hoops California and Florida will put in the way?
The numbers? Eight to 10 years just to begin to get flow. To get to peak capacity, who knows?
ANWR (Arctic National Wildlife Refuge) ” not the same platform problems, but you’re testing and constructing in one of the harshest climates in the world. The energy companies state 10 years as a minimum. But, the huge hurdle and expense is pipeline.
The Alaskans want it to go through Alaska. By far the most expensive option. Best if we want to get the oil to the U.S. (and remember the other Alaska fields ship to Japan). Canada is by far the cheaper option, but that’s politics, which we will leave to another day.
The point here is that this is a very complicated, very, very expensive endeavor that requires decisive leadership, comprehensive review and compromise and it doesn’t lend itself to political grandstanding and campaign sound bites. Fossil fuel energy is going to be with us for quite a while as we find our way to renewable energy. But that’s another column.
Fraser River Valley