Report: Deepwater moratorium won't have major impact on oil supply

[ProSense]

Report: Deepwater moratorium won't have major impact on oil supply

by Jed Lewison

NYT's Clifford Kraus:

But in a report (pdf) issued on Thursday, the International Energy Agency, an intergovernmental group that studies energy policy for industrialized nations, put out some preliminary projections on the disaster’s impact. The group projects that a one- to two-year delay for all planned new deepwater oilfield projects in the gulf could reduce daily production by 100,000 to 300,000 barrels a day by 2015. At the high end, that would be nearly 18 percent of current production in the gulf and 5 percent of total domestic production, but less than 2 percent of total national oil consumption.

You've got to figure that the oil-junkies will focus on the seemingly large 18 percent figure, but remember, that's 18 percent of crude oil production from the Gulf of Mexico which is 30% of domestic offshore oil production which is 33% of overall oil consumption. To figure the impact of an 18% drop in crude oil production from the Gulf of Mexico, you multiply 18% * 30% * 33%. That equals 1.782% -- just under 2% of current oil consumption.

Oil-junkies will then argue that 2% is still meaningful, and they've got a point -- but that doesn't explain why they won't at least support policies that would replace that 2% of lost oil production with alternative sources of energy. (The reality is we need to do far more than that, but they won't even support replacing that 2%.)

Senators from Louisiana will also undoubtedly argue that an 18% decline in oil production from the Gulf of Mexico will harm local economies, and on this point they are probably right. But given that BP's spill is not only causing harm to their local economy but also their state ecology, you'd think that instead of doubling down on a risky bet, they'd be interested in getting Louisiana involved in the production of energy from alternative sources.

If nothing else, this BP spill is a stark reminder that we simply cannot bet the economic future of the United States on oil. We must develop alternatives. This isn't some radical notion, either -- and it's certainly not anti-business. Since the industrial revolution, economic growth and energy consumption have been inextricably linked. We are now entering an era in which the cost of our current sources of energy is growing so rapidly that it has become a constraint on economic growth.

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[HughMoran]

1. Prices haven't gone up

Usually when a disruption may be significant, prices raise in anticipation.

[ProSense]

2. This is a good counter to the noisemakers:

Carville, Jindal, Landrieu and Matalin.