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Bob Moon: Glad you’re here on this Wednesdsay, the 18th of June, a day that began with President Bush suggesting the country can drill its way toward lower oil prices.
His response to the soaring price of gasoline is opening America’s coasts and Alaska’s North Slope to oil prospecting. He’s also pressing Congress to get rid of red tape that he claims has hindered the expansion of the nation’s oil refining capacity.
So, would more domestic drilling bring down pump prices? As Marketplace’s John Dimsdale reports, it depends on whom you ask.
John Dimsdale: President Bush says it’ll be a while before the country can switch from oil to environmentally clean fuels.
President Bush: And that means we need to increase supply, especially here at home.
The President said there are 18 billion barrels of oil within easy reach of the U.S. coastline.
Rayola Dougher at the American Petroleum Institute says those deposits could boost the nation’s oil supply by one to two million barrels a day within seven years.
Rayola Dougher: The spare capacity in the world, the difference between supply and demand, is about 1.5 million barrels and it’s that thin line that’s pushing the price up right now. We import 11 million barrels a day, so I look at that one to two as pretty significant to the United States and to the world.
The American Council for an Energy Efficient Economy figures the nation will save an equivalent amount — two million barrels a day — just from the latest increase in fuel efficiency requirements for cars, but not until 2025.
And will the extra offshore oil be any cheaper? Joel Darmstadter at Resources for the Future, a Washington think tank, says that depends on the world market.
Joel Darmstadter: Why should a United States producer expect any less for the oil that he is producing than the oil that can be fetched on the world market. And that would mean the payoff in terms of dollars and cents at the pump is likely to be much more in the cents area than the dollar area.
That incremental consumer benefit, he says, has to be weighed against the social costs of potential ecological damage.
In Washington, I’m John Dimsdale for Marketplace.
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