With ongoing turmoil in the Middle East and domestic oil production recovering from a partial moratorium, gasoline prices in the United States are on the rise. At least one former oil executive believes the answers is to increase drilling at home.
Gasoline prices have skyrocketed during Barack Obama’s presidency. When he took office, the average price of a gallon of gas was $1.83. Today, that average has toppled $3.50 and is climbing up to $4 dollars in some cities and states.
As developing economies, especially China and India, continue to grow and increase demand for crude oil, prices will invariably rise further unless America steps up domestic production, said John Hofmeister, former president of the Shell Oil Company, on CNN’s State of the Union program this weekend. “We used to produce ten million barrels a day,” he said. “We’re today producing seven.”
As a result of the administration’s moratorium on deepwater drilling in the Gulf of Mexico after the devastating oil spill of last summer, American oil production could shrink to just over six million barrels a day. “And it’s not coming back any time soon,” Hofmeister predicted.
After lifting the moratorium — which was struck down in court as “arbitrary and capricious” — in October, the president’s Bureau of Ocean Energy Management, Regulation and Enforcement has approved just two permits for future drilling in the Gulf. More than a hundred are pending review.
The president also reversed an earlier decision to open access to coastal waters for exploration, instead placing a seven year ban on drilling in the Atlantic and Pacific coasts and eastern Gulf of Mexico.
Meanwhile, there are vast reserves of oil and natural gas waiting to be exploited underneath the Atlantic coastline, beneath the northern coast of Alaska, and on land, in Colorado and Wyoming. Combined, these regions hold over two hundred billion barrels of oil and 2,000 trillion cubic feet of natural gas that are recoverable with today’s technology. If fully developed, it would be enough to free America from the import of foreign oil for almost fifty years.
Yet, according to the president, “drilling alone cannot come close to meeting [America’s] long-term energy needs.” In his most recent State of the Union address, he called for investment in clean energies, electric car development and high-speed rail construction while later promising a crackdown on “price gouging” at the pump.
Despite extravagant subsidies for “green” energy alternatives, fossil fuels still power more than 80 percent of the American economy. The bulk of clean energy is provided by hydrogens and biomass while nuclear plants provide more energy than all renewables combined. Solar and wind remain largely unprofitable.