Futurepundit’s Randall Parker sees restrictions on domestic oil production effectively serving to lower the US’ collective time preference for gasoline. We’ll pass on the marshmallow now to guarantee a couple of them down the road–or at least we’ll let it roast for awhile until it takes on a golden hue:
The NIMBY (Not In My Back Yard) environmentalists have done an excellent job of blocking oil drilling off the US east and west coasts, the Alaskan National Wildlife Refuge, and other US lands. I thank them for preserving that oil for when we really need it (granted that was not their motivation). Because they tirelessly worked to preserve that oil for the future the shifting political winds caused by high gasoline prices will eventually unlock a substantial chunk of US oil for development. …
It does not matter whether the bans get lifted this year. If $4 gasoline isn’t enough to lift the drilling bans then surely $6, $7, or $8 gasoline will do the trick. I can’t imagine that $10 per gallon gasoline will be necessary to make people tell their elected officials that they want the drilling rigs unleashed.
This isn’t the first time RP’s provided this insight. At the $4 threshold, public opinion appears to have shifted in the direction he’s predicted it would. A Gallup poll released yesterday finds that by a 57%-41% margin, Americans favor allowing drilling in US coastal and wildnerness areas currently off-limits. Just a little over a year ago, the numbers were reversed. The public opposed opening up ANWR for drilling by a 57%-39% margin.
According to the Bureau of Land Management, domestically there are upwards of 35 billion barrels of oil under federal lands, the vast majority of which are currently inaccessible due to political opposition. Additionally, there are another 23 billion barrels worth sit in offshore locations currently closed to drilling:
In a report last week, the federal Bureau of Land Management stated that at current U.S. consumption levels there are four years worth of oil and 10 years worth of natural gas under federal lands. However, more than 90% of that energy was under lands either closed to development or open with significant environmental restrictions. The federal Minerals Management Service said an additional three years worth of oil and gas is in offshore areas where drilling isn’t allowed.
These estimates may be low-balling the actual amount of oil and natural gas to be harvested off the country’s coasts. It has been more than three decades since assessments utilizing seismic technology have been made:
Little data exist about how much oil and gas might be found under the waters now closed for exploration. Federal agencies are prevented from doing rudimentary geological surveys in most areas to pinpoint areas of interest. The last time the industry shot seismic imagery was in the 1970s when this widely used search technology was in its infancy.
Other polling data show that the public is no longer under the assumption that high gas prices are a temporary sufferance that will dissipate when global supply catches up to demand. In February of ’03, those who thought a secular rise in prices had begun were in the minority, 36%-62%. Five years later, in early May of this year, the majority clearly thought high prices are here to stay, 78%-19%.
The basic principles of supply and demand aren’t working as they ‘should’ if significantly increasing supply is an option:
Citing U.S. Energy Department data, the paper says that “the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well,” and that this is partly due to higher demand for oil from within the petroleum-rich Persian Gulf region.
As indicated by such a steep price increase (although the depreciation of the dollar is playing into this as well), global demand continues to increase. But supply isn’t keeping up. The big exporters don’t appear able (or willing) to bring more oil to market.
It will be interesting to see how a Democratic Whitehouse and Congress react to increasing public pressure for more domestic production. Will a President Obama feel beholden to whiter “eggheads” of an environmental stripe, or working-class blacks (and Hispanics and whites) who, working scheduled shifts at specific locations that must be driven to, are much less able to avoid the economic pain $4-plus prices bring? If he opts for the latter, will the whiterpeople even be able to muster the ignobility required to criticize him? (Tangentially, I suspect an Obama Presidency will be one that sees Executive power potentially taken to a level it hasn’t been to since FDR–who in the major media outlets or Beltway will be willing to meaningfully criticize him?)