• It would take at least 10 years before any new oil would come to market.
• Maximum Outer Continental Shelf (OCS) output would be 200,000 barrels/day. 
• 200,000 barrels/day is 1% of our daily 20 million barrel consumption.
• Click here for a chart that shows how much it will affect US oil.
• EIA says new OCS production will have no effect on prices.
• We’re not certain where that oil is and how much we could get. The real production is likely to be lower.
• States have veto power for offshore drilling.  About half of OCS resources are off the coast of California, where both Governor Schwarzenegger and the State legislature oppose offshore drilling.
• OCS areas already open for drilling have quadruple the oil and gas potential of the moratorium areas.
  
  

Secret #2:  the world’s oil supply is dropping faster than new oil can be found

• Oil is not a renewable resource.
• Oil fields reach a peak of production, then decline.
• Around 1970, 40 years after discovery peaked, US oil production peaked and began to decline, which is how we became hooked on ever larger quantities of imported oil.
• Decades of increasingly high-tech exploration have not affected the steady drop in discovery of new oil fields since the world oil discovery peak in the 1960s.
• World oil production is expected to peak around 2010, and begin decline soon after that.
• Our top five sources of oil imports are Canada (1.960 mbd), Saudi Arabia (1.661 mbd), Mexico (1.2 mbd), Venezuela (1.187 mbd) and Nigeria (0.741 mbd).
• Because of geological depletion, political instability, or both, oil imports from each country are at risk.
• Any potential new US production is dwarfed by falling production from other areas. 
• In the last year, production from Mexico’s Cantarell, the world’s third largest oilfield, dropped 34%.  Between July 2007 and July 2008, Mexican imports to the US dropped more than 250,000 bpd - more than domestic offshore drilling will give us in 20 years. [4]

Secret #3: CNN: oil price shocks and supply disruptions are on the way

• Matt Simmons, Republican CEO of an energy investment banking firm, told CNN that the recent drop in oil prices is an illusion, and it will climb to $200, $300, or even higher.  [5]
• Simmons wrote a book predicting that Saudi oil supplies were headed down. He foresaw oil heading over $100 a barrel back in 2005, when it was only $58 a barrel.
• Many observers agree, including the US Army Corps of Engineers and the US Governmental Accountability Office and independent geologists.
• Even before oil production declines, disruption of supplies from a major oil exporter, whether through terrorist attack or natural disaster, would cause a rapid price spike.
• Straight talk about future constraints will motivate everyone, even global warming deniers, to adopt conservation and efficiency initiatives politically impossible today.
• Neither McCain, Obama nor Mayor Bloomberg have said a word about the need for contingency plans for fuel supply disruptions.
• When these factors are understood, it’s clear that we must completely transform our society around new 21st century energy choices.  Although we must move beyond oil as quickly as possible, it will still be an important resource.  Used carefully, oil will enable the transition to clean sources of power.

The green way forward: conserve, evolve, transform

• Conservation and efficiency offer the fastest opportunities. Energy efficiency retrofits of homes and buildings will save money and create jobs.
• The increase in U.S. automobile fuel economy standards to 35 miles per gallon of gasoline that passed in 2007 is projected to save more than 1.1 million barrels of oil per day in 2020 - roughly half of current U.S. imports from the Persian Gulf. We have the technology to raise standards higher and faster. We can rebuild Detroit, lower transportation costs, and clean the environment, all at the same time.
• We can scale up solar, wind, biofuel, tidal and geothermal power to replace fossil fuels and create clean, cheap energy here at home. 
• Electrifying the U.S. transportation system and restructuring urban transport could cut petroleum consumption by over 50 percent, nearly eliminating the need for imports.
• Wind-generated electricity could power plug-in hybrid cars, such as GM’s prototype Chevy Volt, at the equivalent of less than $1 per gallon of gasoline.
• Targeted investment will restore domestic manufacturing and create millions of green jobs that can’t be outsourced. [6]

Stuck in the past: outdated strategies that won’t work

When these factors are not known or denied, the natural tendency is to stick to the old answers, and obsessively pursue oil wherever we think it may be located. The gap between declining oil supply and still rising demand will grow, increasing economic and military competition for what’s left.  Countries with large remaining fuel supplies, such as Russia, Saudi Arabia, Iraq, and Venezuela, will gain power over those still reliant on fuel imports.  Their leaders must be delighted to hear some Americans demand continued dependence on fuels of the past, instead of leading the world economy toward a clean tech future. [7] Regardless of any moral questions, trying to gain military control of world oil supplies won’t work. 

• We’re already fighting in those areas, at tremendous cost.
• We haven’t gained political stability for the region.
• We haven’t increased or secured oil supplies.
• Our involvement has weakened America’s standing in the world.
• Pursuing this strategy will drive us to pick fights we can’t win – and can’t afford
  

Neither Obama nor McCain are as green as they claim.  Both misleadingly blame speculators for the rise in oil prices and support the fiction of clean coal, but there are vast differences.  On renewable power, McCain’s words and record don’t match.  He deliberately avoided voting on all eight attempts to pass a bill extending tax credits and subsidies vital to expanding our wind and solar industries, [8] and has voted 50 times against clean energy in the Senate. [9] Despite the windmills in his ads, McCain has said that he doesn’t think that clean energy like wind and solar can work. [10] McCain likes to talk about global warming, but picked a running mate who doesn’t believe in it. [11] "John McCain is energy illiterate," Matt Simmons told CNN.  "As a lifelong Republican, I'm supporting Obama."

Delaying the inevitable transition beyond oil will only make it more costly.  For their own reasons, Obama and McCain aren’t addressing the energy secrets, but we can.  Only by acknowledging the full scope of our energy dilemma will we be able to generate the broad public support needed to implement a 21st century energy policy – and to buckle our seatbelts before we hit the potholes ahead of us.  In this case, knowledge is literally power.

Click here for a short version of this article.

*****
Domestic drilling offered as America’s energy salvation
John McCain has said that “we need to drill here and we need to drill now,” [12] for relief from high gasoline prices “within a matter of months,” [13] and Sarah Palin has said we can drill our way out of our energy problem. [14] Many Americans believe them.  A study of 267 television and cable news programs between June 16 and August 9 showed that in all but one, the media did not mention the official study from the Bush Department of Energy’s Energy Information Agency (EIA) that says drilling won't impact prices for decades, and only then by pennies. [15]

Most potential offshore oil and gas is already available for drilling.
The Congressional moratorium was first enacted in 1982, and has been renewed every year since. It prohibits oil and gas leasing on most of the outer continental shelf, 3 to 200 miles offshore. Since 1990, it has been supplemented by the first President Bush’s executive order. [16] US Department of the Interior’s Mineral Management Service says there are four times more oil and natural gas to be found in areas of the OCS that are already open than in closed areas. The latter might hold up to 19 billion barrels of oil, but those resources are not proven. [17]

The timeline: ten years before any OCS oil is comes to market
Even if the bans on drilling were removed by Congress today, EIA says it would take ten years to begin production.

Maximum production in 20 years of only 200,000 barrels per day
The US EIA 2007 Annual Energy Outlook reports that production from OCS moratorium areas would not start before 2017. It would raise crude oil production by only 200,000 barrels per day in 2027 and its effect on the price of oil would be insignificant. [18] [19] [20]

Half of blocked offshore resources are off California - where drilling is opposed
Of the 18 billion barrels of potential oil blocked by the moratorium, about 10 billion barrels is off of California, where drilling is opposed by both Republican Governor Schwarzenegger and the Democratic legislature.  Republican drilling bills would give all states a veto on drilling within 100 miles of their coastlines. If every other state, including Florida, gives full support to offshore drilling, that leaves only leaves about 8 billion barrels. [21]

What about ANWR?
Even if the ban was lifted now, production wouldn’t begin until 2018.  ANWR production would ramp up slowly to peak at 780,000 bpd by 2027 before beginning decline. [22]
EIA projects that at best, any extra production from ANWR would reduce the price of oil between $0.41 and $1.44 per barrel in 2027. [23]

There could be less oil than estimated, or extracting it might not be cost effective
US Geological Survey estimates on which EIA projections are based – for both offshore OCS areas and ANWR - are just educated guesses, not verified by test wells. [24] No one knows if the offshore areas would be as productive as those in operation now. [25] Extracting oil and gas from several thousand feet below the ocean floor is technically challenging and very expensive, and drilling rigs and crew are in short supply.  It may not be cost effective to produce it. [26] [27]

Fuel depletion: any new oil supplies are added to a leaking barrel
Everyone agrees that world oil production will peak and begin permanent decline. US government sources put that date in the 2030s, but a growing number of experts believe it will come by 2010.  Soon after this point, growing demand for fuel will collide with depleting supply, causing prices to be increasingly volatile, while trending higher. When depletion of world oil supplies is factored in, any increase in US production is insignificant.

Fossil fuels are not renewable.  Oil discovery and production follow a pattern: rising, reaching a peak, and then declining, with 40 years between peak discovery and peak production in a given field or country.  Most of the world’s major oil fields were discovered a long time ago, with global discovery peaking in the 1960s.  Chevron reports that production is declining in 33 of the 48 largest oil-producing countries.[28] According to BP data, eleven of the top twenty producers have peaked. [29]

In the US discovery peaked in the 1930s and production peaked in 1970.  [30] Nearly 40 years later about two-thirds of our oil is imported, mostly from Canada, Saudi Arabia, Mexico, Nigeria and Venezuela. How secure are our supplies?  As Canadian conventional oil production declines, its exports are increasingly extracted, at greater cost, from oil sands.  Saudi Arabia production declined in 2006, [31] and may not be able to increase above 10 mbd except for brief periods. [32]

In the last year, production from the world’s third largest oilfield, Mexico’s Cantarell, dropped 34%. [33] [34] Between July 2007 and July 2008, Mexican imports to the US dropped more than 250,000 bpd - more than domestic offshore drilling will add to our oil supply in 20 years. [35] Nigerian production is increasingly disrupted by insurgents, and our relations with Venezuela are strained.

EIA says world oil production could peak and begin decline by the 2030s
The U.S. Energy Information Agency (EIA) optimistically claims that world oil production will keep growing to 112 mbd in 2030. [36] They expect peaking sometime in the 2030s. [37] Frankly, their track record in prediction is not so good:  in 2006 they predicted a maximum oil price of $100 in 2030, [38] revised to $120 in late 2007. [39] In 2008 that figure was revised again to $200. [40] Their projections of future domestic production are likely to be overly optimistic as well.

Other observers predict decline to start as early as 2010
A third viewpoint expects oil production to peak around 2010 at around 90 mbpd, much earlier than the EIA estimate of 2030.  This group includes the US Army Corps of Engineers, the US Governmental Accountability Office, many geologists not working for big oil companies, and Matthew Simmons, founder and chair of the world’s largest energy investment bank. [43] The Hirsch Report, commissioned by the US Department of Energy, calls for a national crash program to prepare for peak oil. [44] An imminent peak in oil production has been discussed in the Wall Street Journal, [45] the Economist, [46] Newsweek, [47] and NY Metro. [48]

If world production starts falling within the next five years at a conservative rate of 2% depletion, in ten years world oil production will be down about 11 mbpd – about 12% - from where it stands today. New oil production must first replace decline in production from aging fields before net additional oil can be counted. [49] When any new domestic oil production is available, it will be just a few drops in a badly leaking barrel.  There is no way we can produce another 13 million barrels a day. We cannot possibly drill our way to independence from imported oil. 

References:

1. "Drilling for Oil is Not the Answer," Jonathan Dorn, Earth Policy Institute, Sept. 18, 2008, http://www.earthpolicy.org/Bulletins/2008/Bulletin3.htm

2. US DOE, Energy Information Agency, “Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf,” www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

3. Architecture 2030

4. “Crude Oil and Petroleum Imports Top 15 Countries,” US EIA, Aug. 26, 2008

5. “Here comes $500 oil,” CNN, Sept. 22, 2008, http://money.cnn.com/2008/09/15/news/economy/500dollaroil_okeefe.fortune/index2.htm

6. “Drilling for oil is not the answer, “ Jonathan Dorn, Sept. 18, 2008, Earth Policy Institute, http://www.earthpolicy.org/Bulletins/2008/Bulletin3.htm

7 . “Making America Stupid,” Thomas Friedman, Sept. 14, 2008, New York Times, http://www.nytimes.com/2008/09/14/opinion/14friedman.html

8 . “And Then There Was One,” Thomas Friedman, New York Times, Sept. 2, 2008,
http://www.nytimes.com/2008/09/03/opinion/03friedman.html

9 . “McCain’s 50 Votes Against Clean Energy,” Sept. 11, 2008, MatterNetwork, http://www.matternetwork.com/2008/9/mccains-50-votes-against-clean.cfm

10. John McCain Town Hall Meeting, Portsmouth, NH, Dec. 4, 2007, YouTube, http://www.youtube.com/watch?v=n-UuP1UUsZk

11. “Palin Not Convinced on Global Warming,” Washington Post, Aug. 29, 2008, http://voices.washingtonpost.com/the-trail/2008/08/29/palin_not_convinced_on_global.html

12. “McCain, “We have to drill here and drill now,” ABC News, August 4, 2008, http://blogs.abcnews.com/politicalradar/2008/08/mccain-we-have.html

13. “McCain: Offshore drilling could provide relief in ‘months,’ ” CNN Politics.com July 28, 2008.

14. “Alaska’s ‘Frustrated’ Governor Palin On Our ‘Nonsensical’ Energy Policy, Investor’s Business Daily, July 11, 2008, http://www.ibdeditorials.com/IBDArticles.aspx?id=300668510518137

15. “Oil Drilling in Environmentally Sensitive Areas: the Role of the Media,” Center for Economic and Policy Research Issue Brief, Sept. 2008,
http://www.cepr.net/documents/publications/media_drilling_2008_09.pdf

16. “Bush Calls for End to Ban on Offshore Oil Drilling,” New York Times, June 19, 2008, http://www.nytimes.com/2008/06/19/washington/19drill.html

17. “The Offshore? Good luck, bad luck, and Mukluk,” Steve Andrews and Randy Udall, ASPO-USA, Sept. 9, 2008, http://www.energybulletin.net/node/46554

18. “Arctic Drilling Wouldn’t Cool High Oil Prices,”
US News & World Report, May 23, 2008

19. “Oil from the OCS moratoria area: a gusher, or too little, too late?”  Kyriacos Zygourakis, ASPO-USA, Energy Bulletin, August 11, 2008

20. US Department of Energy, 2007, http://www.eia.doe.gov/oiaf/aeo/otheranalysis/ongr.html

21. “The cruel offshore drilling hoax, part 1,” Joseph Romm, Grist, July 11, 2008, http://gristmill.grist.org/story/2008/7/10/142042/915

22. “ANWR is not the answer," Dave Cohen, ASPO-USA, June 4, 2008

23. “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” EIA, May 2008, http://www.eia.doe.gov/oiaf/servicerpt/anwr/pdf/sroiaf(2008)03.pdf, page vi.

24. Ibid.

25. "Parties Split on How to Expand Offshore Drilling," New York Times, June 26, 2008, http://www.nytimes.com/2008/06/26/business/26offshore.html

26. Wikipedia, http://en.wikipedia.org/wiki/Oil_platform

27. “Dearth of ships delays drilling of offshore oil,” NY Times, June 19, 2008, http://www.nytimes.com/2008/06/19/business/19drillship.html

28. “Sustainable Energy Independence for NYC,” Sierra Club NYC, April 2008, http://www.beyondoilnyc.org/report-fuel-depletion.html

29. “Peak Oil Review,” ASPO-USA, June 16, 2008, page 5 http://www.aspencore.org/images/Peak_Oil_Review/Peak_Oil_Review_June_16_2008.pdf

30. “Crude Oil Production, 1954-2006,” US EIA, http://www.eia.doe.gov/emeu/aer/pdf/pages/sec5_6.pdf

31. “Saudi Arabian oil declines 8% in 2006,” Stuart Staniford, The Oil Drum, http://www.theoildrum.com/node/2325

32. “Saudi Oil: a Crude Awakening on Supply,” Business Week, July 10, 2008, http://www.businessweek.com/bwdaily/dnflash/content/jul2008/db2008079_865368.htm

33. “Pemex Cantarell Output Drops 34% on Spending Limits,” Bloomberg, July 7, 2008, http://www.bloomberg.com/apps/news?pid=20601207&sid=aQF381AACFAI&refer=energy

34. “Output plummets at huge Mexican oilfield,” Financial Times, July 8, 2008,
http://www.ft.com/cms/s/0/0bb1abf8-4c78-11dd-96bb-000077b07658.html

35. “Crude Oil and Petroleum Imports Top 15 Countries,” US EIA, Aug. 26, 2008

36. US EIA, International Energy Outlook 2008, World Liquids Production 2005 -2030, http://www.eia.doe.gov/oiaf/ieo/excel/figure_4data.xls

37. US EIA, Long Term World Oil Supply Scenarios

38. “Annual Energy Outlook 2007,” US EIA, p. 70, http://tonto.eia.doe.gov/ftproot/forecasting/0383(2007).pdf

39. “New EIA Outlook Reflects Ongoing Transition in Energy Markets,” US EIA, Dec. 2007, http://www.eia.doe.gov/neic/press/press293.html; price chart, http://www.eia.doe.gov/neic/press/images/2007-11-1.gif

40. US EIA 2008 International Energy Outlook, World Energy Demand and Economic Outlook, June 2008, http://www.eia.doe.gov/oiaf/ieo/world.html

41. “Energy Watchdog Warns of Oil-Production Crunch,” WSJ, May 22, 2008, http://online.wsj.com/article/SB121139527250011387.html?mod=hps_us_whats_news;
“World Energy Outlook 2007: Oil Fact Sheet,” IEA, http://www.iea.org//textbase/papers/2007/fs_oil.pdf.

42. “Another Peek at the Plateau,” Keith Johnson, Feb. 27, 20008, WSJ, http://blogs.wsj.com/environmentalcapital/2008/02/27/another-peek-at-the-plateau/

43. “Crude Oil:  Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing the Peak and Decline of Oil Production,” GAO-07-283, US GAO, Feb. 2007, http://www.gao.gov/new.items/d07283.pdf; “Energy Trends and their Implications for US Army Installations,” Donald Fournier and Eileen Westervelt, US Army Corps of Engineers Energy Research & Development Center, Sept. 2005;
Matthew Simmons, Simmons & Co. International,
http://www.simmonsco-intl.com/research.aspx?Type=msspeeches; the Association for the Study of Peak Oil, http://www.aspo-usa.org/

44. Dr. Robert Hirsch, biographical notes, http://www.d-n-i.net/fcs/hirsch_bio.htm;
“Peaking of World Oil Production:  Impacts, Mitigation, & Risk Management,” Hirsch, et al.,
Science Applications International Corporation (SAIC), Feb. 2005, http://www.mnforsustain.org/oil_peaking_of_world_oil_production_study_hirsch.htm;
http://www.bartlett.house.gov/UploadedFiles/the_hirsch_report.pdf

45. “Cries in the Dark,” June 30, 2008, Wall Street Journal, http://online.wsj.com/article/SB121432276099000211.html?mod=googlenews_wsj

46. “The only way is down,” The Economist, July 10, 2008, http://www.economist.com/people/displaystory.cfm?story_id=11702995

47. “Learning from the Oil Shock,” Robert Samuelson, Newsweek.com, June 23, 2008, http://www.newsweek.com/id/141524

48. “Is the world running out of oil?” NY Metro, July 2, 2008, http://ny.metro.us/metro/blog/my_view/entry/Is_the_world_running_out_of_oil/12831.html

49. Peak Oil Media Guide, Chris Nelder, ASPO-USA, July 2008, http://www.theoildrum.com/node/4291;
http://www.aspo-usa.com/index.php?Itemid=91&id=409&option=com_content&task=view