The People of America's Oil and Natural Gas Indusry

Oil Shocks

Mark Green

Mark Green
Posted August 18, 2011

In a recent blog post on the relationship between crude oil price spikes and economic downturns, the Washington Post's Brad Plumer (filling in for Ezra Klein) comes to this conclusion:

"What's unnerving is that ANWR, Arctic, deepwater, access, economy, fossil fuels, gulf, Keystone XL, moratorium, offshore, oil, onshore, permitorium, , pipelines, shallow water, supply, prices, energy security

First let's acknowledge that the correlation between crude price spikes and dips in U.S. economic performance may be widely accepted but it's not universal. Just this week two International Monetary Fund economists published a paper arguing the impact of oil shocks isn't as large as many think. For argument's sake, we'll accept that spiking crude prices negatively affect the economy. Experts can argue over how much, but, yes, there's economic impact when crude prices rise quickly.

The issue here is Plumer's suggestion that the United States is powerless in the face of oil shocks driven by larger demand. To the contrary, the U.S. has a number of energy policy options to increase the worldwide supply of oil and improve our energy security.

For starters we could develop our own oil resources more fully - onshore and offshore. No matter what the price of oil, the impact is less if the U.S. is able to send fewer dollars abroad because we're producing here.

The government estimates there are about 116 billion barrels of oil, classified as undiscovered, technically recoverable federal resources off our coasts and under federal lands. Much of it is off-limits by federal policy. In Alaska, for example, the Arctic National Wildlife Refuge (ANWR) is believed to hold between 6 and 16 billion barrels. Yet, allowing drilling on an airport-sized parcel inside the 19-million acre refuge has been tangled up in politics for years. Meanwhile, the administration's moratorium on deepwater drilling in the Gulf of Mexico and the slow pace of permitting since the ban was lifted last fall have impacted production of known resources and new exploration.

Second, we can partner with Canada, our No. 1 foreign supplier of oil, to more fully develop its resources. This would include construction of the Keystone XL pipeline, to deliver upwards of 830,000 barrels of oil per day from Alberta's oil sands region to U.S. refiners.

With the right policies, 92 percent of our liquid fuel needs could be supplied domestically and from Canada by 2030. The fact is, energy security is within reach - if we stop wringing our hands over circumstances beyond our control and focus on things we can control: access to America's vast, untapped resources.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.