Drill, drill, drill?

Following is a rebuttal to the blog post titled Energy rebuttal

By pointing out that prices dropped in response to George W. Bush's declaration and not an actual change in supply or demand, you are making the case for me that oil prices are being driven by speculation more than supply and demand. Supply and demand’s effect is muted by speculation. Speculation's impact on prices is something that Republicans including Ted Stevens of Alaska have acknowledged.

Oil companies haven’t pursued available leases on 22.6 million acres within the National Petroleum Reserve-Alaska (NPR-A), nor are they utilizing 10,000 of the drilling permits they sought and received. The number of drilling permits has increased more than 300% in the past 10 years at the same time that gas prices have sky-rocketed.

So why do oil companies want more leases if they can’t keep up with what they have? Oil companies have a financial interest to acquire leases even if they don’t develop them because their stock price is directly impacted by the amount of reserves they hold. For example, Shell’s stock price plummeted when they announced that they overstated their reserves by 20%.

I have no doubt that drilling would be enormously profitable to oil and gas companies, but the general consensus seems to be that it would have little effect on prices. If we only produce 3% of the energy we consume, doubling our output would have little impact.

But, again, whether we get oil from offshore in 20 years or from ANWR in 7-12 years, “the debate misses the point.” We need a comprehensive plan that emphasizes local, renewable, carbonless power supply.

http://resourcescommittee.house.gov/images/stories/Documents/truth_about_americas_energy.pdf

http://www.nytimes.com/2008/07/18/us/18cong.html

http://news.bbc.co.uk/1/hi/business/3890045.stm