Air pollution from other countries drifts into USA

IRVINE VALLEY COLLEGE

MARTHA STUFFLER

PROFESSOR of ECONOMICS
SOCIAL and BEHAVIORAL SCIENCES
DEPARTMENT OF ECONOMICS

Email Mstuffler@ivc.edu Phone 949-451-5759

Communists, oil and the Florida coast

TODAY'S EDITORIAL
May 4, 2006

America's energy policies have been so counterproductive during the past 20 years that the time has now arrived when the communist governments of China and Cuba can jointly teach us a lesson about supply and demand. For years, the United States has refused to explore for oil in the 90-mile-wide waters separating Cuba and Florida. Now, Cuba is enlisting help from China, India and other interested parties in an effort to explore for oil in Cuban waters 50 miles off the Florida coast.
    As you fill up your tank this week with gasoline costing more than $3 per gallon, contemplate how U.S. petroleum supply and demand have changed over the last 20 years. U.S. crude oil output declined by 43 percent (nearly 4 million barrels per day), falling from 9 million barrels in 1985 to 5.2 million in 2005. Meanwhile, U.S. demand for petroleum products increased by 31 percent (5 million barrels per day), rising from 15.7 million barrels in 1985 to 20.7 million in 2005. As a result, net imports of petroleum products soared by nearly 200 percent (more than 8 million barrels per day), skyrocketing from 4.3 million barrels in 1985 to 12.4 million in 2005.
    One important reason why U.S. crude oil production has fallen so precipitously since 1985 is America's willful refusal to explore for oil where reserves certainly exist. As then-Interior Secretary Gale Norton testified before Congress in 2003, the United States Geological Survey "estimates that [the northern coastal plain of Alaska's Arctic National Wildlife Refuge (ANWR)] contains a mean expected value of 10.4 billion barrels of technically recoverable oil," whose daily output of "nearly 1.4 million barrels" would be "larger than the current daily onshore oil production of any of the lower 48 states." ANWR alone would have compensated for nearly 40 percent of the 1985-2005 daily decline in U.S. crude oil output. Adding its estimated reserves to total U.S. proved oil reserves (22 billion barrels) would increase the latter by nearly 50 percent.
    Even ANWR's huge reserves pale compared to oil located throughout the waters of the U.S. Outer Continental Shelf (OCS). The Minerals Management Service (MMS) of the Department of Interior estimates that the OCS contains 76 billion barrels of oil in yet-to-be-discovered fields. That's three and a half times U.S. proved oil reserves. Offshore oil reserves in the Gulf of Mexico alone are estimated to be more than 40 billion barrels, much of it precluded from exploration by official U.S. policy. Compared to U.S. proved natural-gas reserves of 189 trillion cubic feet, the MMS estimates that the Gulf of Mexico alone holds more than 200 trillion cubic feet of undiscovered technically recoverable natural gas.
    While celebrating their success in preventing American energy companies from exploring for oil and gas between Florida and Cuba, environmentalists and Florida politicians ought to contemplate China's egregious environmental record as they look with horror at Chinese drilling rigs soon to be dispersed throughout Cuban waters less than 50 miles from the Florida coast.