Wednesday, May 26, 2010

Drill where? Drill how?

Every now and then someone comes up with what seems like a brilliant ad campaign or slogan but which ends up being very, very wrong.  The GOP's "drill baby drill" and "drill here, drill now" sound patently insane in light of the volcano of oil erupting into the Gulf of Mexico courtesy of BP, Halliburton, MMS and a host of others.  Yet there are those who insist that it's still the right strategy, never mind the unparalleled environmental damage we're only now beginning to see and the fact that it will take weeks to stop and decades to clean up.

I have to say I think the GOP was onto something, though as is typical they had it ass-backwards. It shouldn't be "drill here" it should be "drill there."  The US only has 2% of the world's oil reserves so even if we were to drill every known resource we wouldn't even make a dent in pump prices.  Experts estimate that if we were to go full-bore with domestic drilling we might reduce the cost of gasoline about $0.03/gallon by 2020.  At today's prices that's 1% and if you think prices won't go up between now and then I have a bridge with your name on it.

Additionally, as any econ101 student knows, crude oil is a fungible resource so, once it's refined, it makes no difference where it was drilled.  So why drill here?

Why not leave ours in the ground and use up what other countries have, all the while working on finding alternatives?  If oil is $75/barrel now it's a safe bet that it'll be double that in a few years, then double again not long after.  Who knows, maybe what amounts to 2% now will be 10% then giving us a lot more control and making sure we have oil when it's far more scarce and expensive than today.  The EPA recently published a study saying if the average car's mileage were to go up 10mpg, which is well within the reach of technology, that would be equivalent to a reduction of $1/gallon in 2020.  Which makes more sense: "drill, baby, drill" or "sip, baby, sip"?

And keep in mind that petroleum is used for a lot more than just automobile fuel: pharmaceuticals, lubricants, jet fuel, plastics, clothing, food, chemicals, etc and right now there is no cost-effective replacement for it in and of those applications. Would you burn something you knew was crucial to the manufacture of medicine if there was another viable option?

But more to the point, let the drilling and the accidents happen elsewhere.  Don't get me wrong: I don't wish these calamities on anyone and I'd love to see a world where there are no oil rig explosions or coal mine collapses at all, but at the moment that's nothing more than fantasy - accidents and human error happen with alarming ferocity.  Maybe in another decade or two we'll have more confidence that we can drill in miles of rock beneath a mile of water.  But that time isn't now. Who knows, by the time that technology does roll around we may be lucky enough to not need it at all.

But drilling near critical, fragile, irreplaceable environments like the Gulf coast, coral reefs (aka: fisheries) and ANWR?  Positively absurd.

1 comment:

  1. Beautifully written, as always. (Though you did lose me for a minute at the word "fungible" when I had to pause to dry heave.) That word is even worse than "pamphlet."