Tuesday, October 15, 2013

ANWR

The talk about gaining energy independence has heightened in recent years.  Because of this talk, drilling in the Arctic National Wildlife Refuge (ANWR) has also increased.

Many people believe that drilling in ANWR would help reduce our foreign dependence on oil.  They believe that gaining our energy independence is a worthwhile goal and drilling in ANWR is a small price to pay.  But our foreign dependence on oil has decreased in recent years.  This is especially true of OPEC countries or countries that we believe are hostile toward us.  We have increased imports of "friendly" countries, such as Canada.  There has also been an increase in domestic oil production.  Despite all of this, people still want to drill in ANWR.

Part of the problem with drilling in ANWR and consequently, the debates over it, is that nobody knows how much oil is there.  We have to drill there to find out how much oil is there.  A 1998 U.S. Geological Survey found that there is at least 5.6 billion barrels of recoverable oil and possibly as much as 16 billion barrels.  According to The End of Oil, this study was edited by the George W. Bush administration in an effort to call for the drilling there.  A study from the U.S. Department of Interior in 1987 found that recoverable oil would be anywhere from 600 million barrels of oil to 9.2 billion barrels of oil.  The U.S. Energy Information Administration (EIA) is estimating that ANWR could range from 510,000 barrels to 1.45 million barrels of oil per day.

The EIA believes that there is 10.4 billion barrels of oil in ANWR.  Assuming that, the oil production in ANWR would account for 0.4-1.2% of total world oil consumption by 2030.  Global demand, in 2030, is estimated to be 85 million barrels per day.  The EIA also estimated, in 2008, that foreign dependence on foreign oil would decrease from 54% to 48%, in the best case scenario by 2030, and to 52% in the worst case, if ANWR was opened for drilling.

The EIA warned that OPEC, specifically Saudi Arabia, could offset any costs related to ANWR drilling by releasing more oil to the marketplace.  They warned that, specifically, because the oil from ANWR is an insignificant amount in the worldwide marketplace.  Oil prices would unlikely be affected by drilling in ANWR.  We would, even more likely, not see prices at the pump decline because of it.

Drilling in ANWR will not likely affect the global marketplace nor our prices at the pump.

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