CBO Says Drilling on Federal Land Won’t Net Much Money or Energy
Monday, August 13, 2012
It turns out that the slogan “drill, baby, drill” ought to be “nil, baby, nil.” According to two recent reports by the non-partisan Congressional Budget Office,(CBO) opening all federal land to oil and gas drilling — including the Arctic National Wildlife Refuge (ANWR) — would do nothing to insulate Americans from price hikes or global supply disruptions and would yield only modest revenue to the U.S. Treasury. The reports, released in May and August of this year, drive a stake through the heart of the two primary arguments in favor of increased drilling on public lands.
The oil and gas industry and their congressional allies have argued for years that removing fossil fuel drilling bans that protect many public lands and waters would produce significant revenue for the federal government and help reduce the national debt. The August 9 report — which was requested by Republican vice presidential candidate Paul Ryan in his capacity as House Budget Committee chairman — concludes that opening ANWR, parts of the Atlantic, Pacific, and Florida coasts, and all other targeted public lands would yield only $7 billion over the next ten years, barely 0.1% of the deficits CBO projects for that period.
As to energy security, a CBO report released May 10 found that more domestic drilling cannot make America less susceptible to price hikes or supply disruptions, primarily because oil is sold on a global market that would quickly absorb increased supply and blunt any domestic price impact. In fact, CBO concluded that even if gas prices did go down, “such lower prices would encourage greater use of oil, thus making consumers more vulnerable to increases in oil prices. Even if the United States increased production and became a net exporter of oil, U.S. consumers would still be exposed to gasoline prices that rose and fell in response to disruptions around the world.” After reviewing different proposals to enhance the country’s energy security, CBO determined that using less oil is the only way to avoid price increases.
Drilling advocates who cite the so-called laws of supply and demand to support increased drilling are being simplistic. A recent statistical analysis of gasoline prices and domestic oil production for the 36 years between 1976 and 2012 concluded that there is no statistical correlation between increased drilling and lower prices at the gas pump. For example, between February 2009 and February 2012 seasonally adjusted U.S. oil production increased 15% even as gas prices went up by 72.9%, from $2.07 per gallon to $3.58 — exactly the opposite result predicted by supporters of more drilling.
- Matt Bewig
To Learn More:
Potential Budgetary Effects of Immediately Opening Most Federal Lands to Oil and Gas Leasing (Congressional Budget Office)
Opening Protected Areas to Drilling Will Not Provide US “Revenue” Promised by Industry: Report (Common Dreams)
CBO Report: Boosting Oil Production Won’t Protect Americans from Gasoline Price Shocks (by Stephen Lacey, ThinkProgress)
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