Drilling Ourselves into a Hole

TALKING POINTS: Drilling Ourselves into a Hole

Oily Lingo:

“Peak Oil” - Peak oil is the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters terminal decline. If global consumption is not mitigated before the peak, a world energy crisis may develop because the availability of conventional oil will drop and prices will rise, perhaps dramatically.

Why are gas and oil prices so high?

Many experts give varying reasons why gas and oil prices remain high. Here are just a few:

• Slowdown in growth of world production, a sign of the “peaking” of global output
• Asia and India increased consumer demand for oil
• The top 5 oil companies made record profits in 2007. What will they make in 2008?
• Speculators are buying oil because, with the weakened US dollar, Oil is a more stable investment. Also, Speculators think the US or Israel might attack Iran, sending oil prices soaring
• Some believe oil producers (whether domestic or international) are holding back their supply because they know the price will continue to get higher

How much money are oil companies making?

• In 2007, Exxon Mobil’s profits beat the record for highest profits ever made by a public U.S. company (previously held by Exxon) with a net profit of $40.6 billion. Another way of looking at this is that Exxon made $77,245 per minute in 2007, more money in one minute than 70% of Americans earned all year.
• It costs oil companies less than $10 barrel to extract and ship a barrel of oil.
• Finding costs to explore and develop an oil field range from $5 per barrel in the Middle East to $67 per barrel off the U.S. coast.
• Oil has doubled in price over the past 12 months and gas prices have
• See “Big Oil Feasts on Economic Woes” (by Daniel Weiss, Center for American Progress, 2/7/08)

10 Reasons NOT to lift the Offshore Drilling Moratorium from the Center for American Progress:

1. We can’t drill our way out of the energy crisis

2. We don’t have enough oil to meet our demand

3. Oil companies have not utilized the leases they have now

4. Offshore drilling would have an “insignificant” effect on long-term prices

5. Drilling could lock us in to a future of expensive gasoline

6. Production would be expensive, would not start for a long time, and would have no short-term effect on oil prices

7. There isn’t enough drilling equipment

8. We can’t refine the oil we would extract

9. Drilling more oil now is not the path to a future based on alternative energy

10. Debating offshore drilling in sensitive areas distracts from real solutions

Center for American Progress on Offshore Drilling

See also “A Better Solution for Gas Prices” (by Sam Davis and Daniel Weiss, 5/1/08)

“Big Oil Plays Congress for a Fool” (by Nick Kong and Alexandra Kougentakis, 4/3/08)

How Oily are your Members of Congress?

Senators who vote against clean energy take on average 3 times more oil money than those who vote for clean energy.

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