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President Obama may have thought he was appealing to patriotic instincts, but his speech at Georgetown University sent the wrong message by promoting the fallacy that we can save our economy by driling for more "domestic oil" to reduce our dependence on "foreign oil."

Webster's defines a "fallacy" as "an often plausible argument using false or invalid inference."  That is exactly what our elected officials are selling us.  President Obama's argument that we can reduce our dependence on foreign oil by drilling in the the Gulf is plausible, as is Republican Senator Mitch McConnell's retort that even more oil could be produced by drilling in Alaska.  The false inference is that drilling for more domestic oil will somehow end the cycles of energy crises that have triggered economic recessions since the 1970's.

Here are the facts:

More domestic crude oil will not shield us from higher and more erratic oil prices in global markets.  Most of our imported oil comes from Canada and Mexico.  We do not import any meaningful quantities from Tunisia, Egypt or Libya.  Yet, the oil we buy from Canada and Mexico also costs more than $100 per barrel, just like the oil from countries in turmoil.  Because oil prices are set by a global market.  Even if we drill for more oil in the US, the price of all our oil will be determined by OPEC, increasing demand from China and other developing countries, and instability in the Middle East.  [After this post first appeared, some readers pointed out that reducing foreign oil imports will help reduce the balance of trade deficit.  True, but getting there by producing more domestic crude is not the solution, for reasons explained below.]

More domestic crude oil will not decrease environmental harms.  Whether we burn domestic or foreign oil, the impact on the environment is the same.  Indeed, more drilling in the US will result in more environmental harms, not less.  Remember that the BP Deepwater Horizon and the Exxon Valdez catastrophes were the direct result of domestic oil production.  Expect even more of these types of disasters as domestic oil production expands into environmentally sensitive areas, especially when the multinational oil industry wraps itself in our flag and argues for more lenient regulations in the name of reducing our dependence on "foreign" oil.

More domestic crude oil will not increase the supply of domestic gasoline, diesel, or other refined products.  Our US refineries have been operating at 85% to 90% capacity throughout the Great Recession.  This is very close to full capacity because refineries must shut down periodically for maintenance and safety reasons.  That is why nearly 25% of our oil imports are in the form of refined products.  We do not have the capacity in the US to refine more crude oil into useful products.  Even if we produce more oil from domestic sources to replace "foreign oil," that will not result in more refined products in the US market.  As the economy recovers and demand increases, we will need to import even more refined products from foreign countries.

More domestic crude oil will not make us more competitive with China, India, and Europe.  Markets in the rest of the world are shifting to sustainable energy.  Germany is getting almost 20% of its energy from renewable sources right now.  GE just bought a French technology company and anticipates creating large numbers of renewable energy jobs in Europe where government policies favor sustainable energy.  China is outpacing us in sustainable energy investments.  In the short run, these countries are creating new jobs in new industries.  In the long run, they will have less expensive sources of energy.

President Obama's embrace of more domestic oil production as the solution to "foreign oil" is tragic on many levels.  It resulted in news headlines that distracted citizens from many other initiatives that he has promoted to wean the US from oil, domestic or foreign.  It weakened him politically by damping the enthusiasm of environmentalists and others on the left who are his natural base, while emboldening those who support dirty fuels.  At the same time, he sent a confusing message to vast numbers of independent voters by suggesting that the dirty energy advocates have a legitimate argument when they say that drilling for more domestic oil is a solution.  That lets his critics avoid the very tough question of how we will wean ourselves from dirty fuels.

Most tragically, the President's willingness to promote domestic oil as a solution to "foreign oil" appears to represent an abandonment of the one thing that will ultimately help us move to a more sustainable energy infrastructure -- using government policy to change the economics of energy.  If we really want to build a sustainable energy infrastructure, we should start by: (a) phasing out all direct and indirect government subsidies for dirty fuels over a seven-year period; and (b) including the cost of pollution and related harms to human health in the price of dirty fuels.  Not only would that spur investment in clean energy technologies, but it would also reduce the government deficit and the trade deficit.

John Howley

Woodbridge, New Jersey

 


Comments

04/01/2011 12:01pm

What is Politics getting in the way again? Why not fight four wars at once
since we spend half of the national tax income on military already. More than all the other governments combined. I
understand for every $10 increase in a barrel of oil the Department of Defense
(Offense is more accurate), the DoD spends an extra $600,000,000/yr on fuel.
From $40 to $100 is Sixty or six times
six hundred million per year.

"We Have Met the Enemy and He Is Us."
- Pogo

Reply
04/21/2011 2:46pm

John, well said. Kind of sick that it costs oil producers, at least in most of the Arab regions, only around $5-8 to produce a barrel of crude, yet speculators in the financial markets drive the prices up past $100.
We've got a clean energy blog too I would hope you don't mind us plugging here, http://www.basicfuels.com.
Thanks and nice work!
Tom
Basic Fuels, LLC.

Reply
Mike H
04/22/2011 2:28pm

John...I think you are overlooking - hopefully not intentionally - one important issue here. Most experts agree that producing more oil in the U.S. and importing more oil from friendly countries will decrease the oil we need from middle eastern countries that do not like us. From a national security and bloodshed standpoint, this is a very good thing. Also, Obama is simply suggesting that we accept reality (we need to produce SOME domestic oil) while focusing hard on getting off oil and setting CAFE standards high enough to help us get there. Bringing price down is not the reason Obama is drilling domestically and he has as much as said this recently. That won't happen...which is a good thing.

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sherri cohen
07/12/2011 7:33pm

I emailed my son David when i heard the news on finding an abundance of Shale here in the USA. He wrote back to me:

Mom,
Sooooo are you familiar with the term "propaganda"?
Notice an ounce of gold costs over 1500 dollars?
Why?
Google tar sands and oil shales. Read about the actual Energy Return on these. It is barely 1:1. It also requires huge amounts of expensive fossil fuel hungry equipment to get out of the ground. Do we have enough worldwide resources left to keep this kind of thing going? Not really. We are turning our corn into fuel just to subsidize poor destitute farmers. This has an energy return of *less than 1:1* ... meaning it is a total waste of not just energy but FOOD. Did you know most of Africa has a corn shortage? That's because of us. We won't export our corn to them, or not enough of it. So they starve.

Remember in the 80's when the USSR collapsed, and for a few years there was no real government or structural hierarchy whatsoever in Russia? This was because they peaked on local Soviet oil and no longer had the energy resources (ie money) to keep an iron fist government in power. It took a long interim to switch over to being a net-importer of energy resources (ie oil). In this time there was little to no gas at the pumps and resultingly NO FOOD AT THE MARKETS. What would you do if:
a) Gas costs 10 dollars a gallon and therefore food (which travels thousands of miles on gas hungry trucks before hitting yr plate) costs 3-4 times as much. As in a fresh tomato is like 10 dollars. OR

b) Gas rises higher then 10 dollars a gallon and it is no longer profitable or even affordable to be in the food industry-- so the distribution companies stop bringing food to your local market. There is nothing in the local market any more. This includes packaged and canned foods, they all travel on trucks, and they are all packaged in materials *made from petroleum*.

Are you prepared to grow all or most of the food you need to survive? Learn how to can and preserve so you can HAVE yr tomatoes in the off-season? Have to prepare all food from scratch and dictate your daily menu based on whats fresh and ready, since that will go bad in a few days?

It is important to understand the idea of RESOURCE POOLS. So for example, you might think, "well. at least I'll have my electricity, that doesn't rely on oil." Unfortunately, however, you are dead-wrong. Electricity is merely one pool of resources that helps fuel another pool. The amount of electricity we have available dictates the amount of oil, coal, alloys, etc that we have available, and everything in vice-versa. So when the oil runs out, just a little bit later the electricity grid fails. Now you might think that if you have solar-panels out there in the desert, you're good, but no-- any one who has panels knows that unless you have a huge battery (many $$$$$), you are forced to sell that electricity to PG&E and still live on the grid-- there's no way to store that energy except down by the power plant! Duh!!

At this point you might be thinking "what do you mean RUN OUT?!?!" You're reading articles about digging up shales and sands in Texas and it's all gonna be great, back to a dollar a gallon. Mom, that is total BS-- we have known about the sands and shales for decades and haven't touched the shit CUS IT AINT PROFITABLE--- that means no energy!

FACT: US OIL PEAKED IN 1971!!!!! Yes, it IS possible to make new discoveries on US soil, but they will be EXPONENTIALLY SMALLER than all discoveries previous. This is a FACT not a conspiracy or legend. And the pseudo-proof that the world has already peaked on oil comes in two thought-bubbles:

a) Yes, we make new discoveries all over the world every single day and YES they are all smaller than the previous discoveries. And by smaller i mean EXPONENTIALLY smaller. That means half as small as the last discovery. And the next one is half as small as that one. And so on.

b) 50% of the worlds daily oil (repeat that in your head a couple times) comes from ONE FIELD IN SAUDI ARABIA called Ghawar. We have been getting over 50% of world oil from this field since the 50's. It is now in depletion-- that means that over half of its "total oil" has been mined and the Energy Return on Investment (EROI) is now shrinking... again, EXPONENTIALLY shrinking, year by year. And yet we're still getting 50% of our daily oil from this thing. Why? Why aren't we capping and saving such a valuable resource? Here's the kicker: because not one single discovery in the past 30-40 years has even amounted to a TENTH of the value and size of Ghawar. That's right, we haven't discovered an actual plentiful oil field in over 30 years. What do you think of that?

I'll tell you what I think. I think we're living on borrowed money from the past, and that the bank account is going to reach zero soon. After that, the illusion of our current world carrying capacity will be debunk

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