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Home Publications Blogs Beat the Press Robert Samuelson Thinks You Can Have Your Oil and Burn it Too

Robert Samuelson Thinks You Can Have Your Oil and Burn it Too

Monday, 07 February 2011 05:17

Robert Samuelson wants the United States to increase domestic oil production to insulate itself from political unrest in the Middle East and other oil producing regions. There is a fundamental flaw in this logic. If the United States increases its production of oil at a time when it is still readily available from elsewhere in the world, then it would not be available if the United States was subsequently cut off from foreign sources of oil.

For example, the Energy Information Agency estimated that it would take 5-10 years to bring the Arctic Wildlife refuge to peak production of 1 million barrels a day. It could sustain this rate of output for roughly 10 years and then phase down to zero over the next 10-20 years. This means that if we had begun producing oil from the area in the early 90s, as many had advocated, the flow of oil from the region would already be passed its peak and on the way down.

The same logic applies to any domestic drilling. If anyone wants to increase U.S. energy independence in the event of a sudden cutoff of oil, they should be urging less domestic production, not more.

Comments (9)Add Comment
The Other Problem..
written by Cujo359, February 07, 2011 6:44
The other problem with using our oil reserves is that there just isn't all that much oil left in the U.S. We import about 4 billion barrels a year now (we're also one of the biggest oil producers, of course). All those new offshore reserves the Obama Administration just opened up to drilling last year wouldn't last five years at that rate, even if we could pump the stuff out of the ocean floor that fast.
Obesity Security Program Protects USA From Foreign Food Cut-Off
written by izzatzo, February 07, 2011 7:06
The same logic applies to any domestic drilling. If anyone wants to increase U.S. energy independence in the event of an sudden cutoff of oil, they should be urging less domestic production, not more.

Exactly. Any economist knows from Coasian Firm Theory that supply reliability of an input factor can only be achieved by not supplying the resource in question from within the firm.

Oil must be continue to be subcontracted out for the country they same way a shoe company obtains shoelaces from others through subcontracts rather than attempt to make shoelaces itself, which would violates Adam Smith's rules of specialization.

It's a good thing that businesspersons from the private sector who understand these things are finally running the country like a business or the USA could be in a deep recession or something like that.

Samuelson's next article will demonstrate how domestic obesity in the USA has already protected it from a foreign food cutoff the same way more domestic oil production would work.
This is Pure BS
written by Jim in Panama, February 07, 2011 7:31
"Domestic" oil? There is no US Government Oil Inc, there is not one single oil well owned by the United States. Every single drop of oil that's brought to the surface in the US is owned by the oil company that leased the well site from the government. There IS NO SUCH THING as domestic oil. There is only "oil"
written by dunkelblau, February 07, 2011 9:07
Does the same logic apply to domestic drilling for exploration? Or is there nothing left to find here?
Not much left
written by PeakVT, February 07, 2011 12:57
The US, or at least the onshore lower 48, is probably the most explored region in the world. There is some left to produce, but not all that much left to find. Offshore, there might be more, but it is mostly going to be in deep to very deep waters.

People who call for "reducing our dependence of foreign oil" just don't know the numbers. The US produces about 7.5 million bbl per day, and uses 20 million. Even the most aggressive oil drilling and production efforts could not replace the amount currently imported. The fact is that the country needs to reduce its dependence on oil, period. No qualifiers.
written by Downpuppy, February 07, 2011 2:36
Samuelson didn't mention Alaska. Maybe he saw the USGS revision - 1 billion barrels, not 10


Had there been 10, it might have made sense to get going before the Alaska pipeline fell below the minimum volume needed to keep it from freezing. At 1, might as well leave the refuge in peace.
written by dopp, February 08, 2011 5:34
Back when Saudi oil was 50 cents a barrel, we had import quotas to make sure the domestic oil companies had a handsome profit. This was known as "Drain America First." And so we did.
Conservation needs more emphasis
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"From 1975 to 2000, American cars cut their fuel use by the equivalent of 2.8 million barrels of oil per day, spurred largely by Corporate Average Fuel Economy (CAFE) laws. Then progress stalled. December's energy law will raise CAFE standards to 35 mpg by 2020, but pushing them to 40 mpg would cut oil demand by 1 billion barrels per year, roughly our current imports from Saudi Arabia, Iraq and Venezuela combined.", http://www.popularmechanics.co...nt/4254875
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.