The News Journal - Oil Companies have Lots of Leases to Drill
When you first hear the idea "let's allow offshore drilling and it will cut gas prices," it sounds like it makes sense, especially when gas is more than $4 a gallon. But the facts say otherwise.
The only way we can achieve energy and climate security in this country is to reduce our dependence on oil.
Unfortunately, President Bush and Sen. John McCain are trying to sell us on the oil companies' old argument that repealing the 27-year old moratorium on drilling in protected areas offshore will lower gas prices. Americans need to put this tired debate to rest. Our security -- both here at home and abroad -- depends on it.
First, the oil companies in this country now hold 7,000 leases to drill offshore, yet only 20 percent of those leases are producing oil. That is 68 million acres for which they already have the rights to drill. Nearly 80 percent of our offshore oil is already available for leasing -- approximately 54 billion barrels total. They could be drilling in these areas, but they are not.
Assuming oil companies drilled in new areas, it would take at least a decade for new production to begin. Just last week, the U.S. Energy Information Administration concluded new drilling would have no impact on oil prices before 2030.
Prices would still be determined by the world market, which will be adding billions of new consumers from growing economies in China, India and other countries.
OPEC countries control two-thirds of the world's oil reserves. If we add a bit more oil to the market, they can cut their own output to keep prices high.
Moreover, the majority of the world's oil is in unstable regions. Prices surge when officials threaten to attack Iran or raids shut down production in Nigeria.
Here in Delaware, we are paying $10 more a day for gas -- around $3,600 a year -- than we were seven years ago. That is a bite out of a family's budget.
During the same period, permits for new oil drilling leases increased by 361 percent. Put simply, allowing more drilling does not equal cheaper gas.
Instead, we should be talking about a cleaner, more fuel-efficient future. Oil companies have the money to make new investments. In the first quarter of this year, the five largest domestic oil companies made $37 billion in profits. Since 2001, the number is close to $600 billion.
We should take back tax breaks for big oil companies, which total more than $2 billion over 10 years, and invest in green energy technology. We should have a windfall profits tax to fund everything from mass transit to high-speed rail to the next generation of safe, efficient cars. Finally, we should restrict speculation and price-gouging, and stand up to OPEC's monopoly.
We need solutions of the future, not drilling ourselves deeper into dependence on oil.