Opponents of increased domestic oil production like to portray the U.S. as being helpless in the face of worldwide events. This argument sometimes takes this form:
… with only 2% of the world’s oil reserves, we can’t just drill our way to lower gas prices – not when consume 20% of the world’s oil.
…oil prices are dictated by the vast world market, of which U.S. production is just a small fraction.
This notion that a politician can wave a magic wand and impact the 90-million-barrel-a-day global oil market is preposterous…
While it is good to see supply and demand being mentioned when discussing oil, the U.S. is hardly a feeble little victim unable to affect the market.
In 2010, according to the EIA, the world produced about 87 million barrels of oil today, with 22 countries producing over a million barrels a day. Let’s look at the top producers:
So even if you consider 11.16% to be a “small fraction” it is also happens to be the third-largest fraction. We are a major-player in the market and our decisions can have an impact. As the Washington Post put it:
Because oil products are so essential to companies and motorists, incremental changes in the supply-and-demand balance have a relatively large effect on prices.
And right now the market is tight:
…because a series of crises has shaved oil production or boosted demand worldwide. Together they add up to a difference of about 1 million barrels a day in the global oil balance.
So to make an impact the U.S. doesn’t need to supply the entire market, but do our part to fill the gap, but instead the market sees projections that Gulf of Mexico production on Federal areas will be down 530,000 barrels a day this year.
The market sees 87% of our offshore acreage off-limits, it sees see Federal permits lagging in the areas we are allowed to develop in, both offshore and onshore. It sees a million barrels a day from ANWR sitting on the sidelines, and it sees the U.S. blocking upwards of 800,000 barrels a day from Canada.
The market sees that the U.S. could secure 100% of its liquid fuel needs by 2024.
And the market sees us taking a pass.
So when you hear folks say that we are helpless on the supply side and have to rely solely on reducing demand tell them that you want a true all-of-the-above energy strategy with both increased production AND increased efficiency. Otherwise the portrait of the U.S. as being rudderless in a stormy energy sea may prove to be self-fulfilling prophecy.