...the reality about more drilling on public lands and fuel prices

The debate is heating up! With fuel prices at their highest in history, the oil and gas industry and its supporters are working overtime to lead us to believe that opening more public lands to more drilling will lower fuel prices. In reality, America cannot drill its way to lower fuel prices.

We've already countered many of the arguments out there calling for more drilling on public lands to lower fuel prices. If you haven't had a chance, read through these arguments and counter arguments.

Since posting these counter arguments, we received several additional questions relating to drilling on public lands and fuel prices. We've selected the five most common questions and had our public lands policy expert, Kate Zimmerman, answer them for you.

Question 1 from Pete in Maryland -- Do we have sufficient refining capacity even if we increase the availability for more crude oil?

Answer: Refinery capacity is a factor in today's higher gasoline prices; however, environmental regulations are not the reason for tight refinery capacity, according to the Department of Energy, the Environmental Protection Agency, the General Accounting Office, and even oil industry executives. In the mid-1990s too much refining capacity, not too little, concerned the nation’s major oil companies. At that time, the oil and gas industry faced what it termed “excess refining capacity,” a circumstance it viewed as a financial liability that drove down overall profit margins. The industry reduced the total amount of potential supply by closing down more than 50 refineries in the past decade. Consider the market fundamentals: refiners reap higher profits when capacity is tight, so they actually have a disincentive to significantly expand production.

Recently, the industry has been adding capacity at existing facilities at a rate equivalent to the construction of about one new refinery a year with the capacity to refine 150,000 to 300,000 barrels per day. Since 1975, the EPA has received only one permit request for a new refinery. Instead, the industry has found it costs less money and takes less time to expand existing facilities.

Question 2 from Jackie in Colorado -- If, for years, environmentalists had not fought drilling in ANWR, we would already have the oil, and be closer to energy independence.

Answer: With only 2.5 percent of the world’s oil reserves, the Unites States uses 24 percent of the world’s oil supply every year. Unless, we significantly reduce our demand for oil, we cannot drill our way to energy independence. For example, in 1998, the United States Geological Survey estimated that the federal lands within the Arctic National Wildlife Refuge contain approximately 7.7 billion barrels of technically recoverable oil. At current rates of consumption (over 20 million barrels per day), the United States would have burned through that oil in less than one year.

Question 3 from Linda in Minnesota -- The oil companies have such new and improved technology that they can drill without disturbing the environment.

Answer: Whether onshore or offshore, drilling for oil and gas remains a dirty business.

In an energy speech recently, Senator John McCain said that: "As for offshore drilling, it's safe enough these days that not even Hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston." In fact, Katrina and Hurricane Rita did cause damage to oil rigs and storage facilities in the Gulf, according to press reports and government studies. The hurricanes totally destroyed 113 oil rigs, according to the government's Minerals Management Service, and damaged 457 pipelines. The resulting oil spills were large enough to be seen from space, according to several reports. A review by the Houston Chronicle reported that the two storms in the summer of 2005 caused 595 oil spills that released an estimated 9 million gallons of oil into the gulf, much of that from oil storage facilities on the shores.

And it doesn’t take a hurricane. There are 300 to 500 spills every year, a number which will grow with increased production. Moreover, during normal drilling operations for oil or gas, drilling muds are used to cool and lubricate the drill bit. Spent drill muds are then discharged over the side of the drill rig directly into the ocean. Each well drilled produces, on average, 180,000 gallons of drilling muds and cuttings. These discharges customarily contain toxic materials known to accumulate in the ocean food chain leading to man. Of primary concern are heavy metals like mercury, chromium, barium, arsenic, and cadmium.

With respect to onshore operations, even with new drilling technology, wildlife and clean water and air are taking a hit from drilling. During the first four years of development on the Pinedale Anticline, a new natural gas field in Wyoming, the overall wintering mule deer population dropped by 46%. The Greater sage-grouse may require listing under the Endangered Species Act, in part, as a result of damage to its habitat from current oil and gas drilling. This past year in Colorado, over 1 million gallons of polluted, industrial drilling mud was accidentally spilled into the West Parachute Creek on the Roan Plateau. Drilling also pollutes the air. The oil industry on Alaska’s North Slope annually emits approximately 70,000 tons of nitrogen oxides, an important component of smog. According to the Environmental Protection Agency, this is more than twice the amount emitted by the city of Washington, D.C. The small town of Pinedale, Wyoming (pop. 1412), which sits just 100 miles south of Grand Teton National Park, experienced its first hazardous ozone alerts this past winter as a result of emissions from nearby drilling operations.

These are just a few examples of the impacts to wildlife, water and air from drilling. We will see many more if drilling is increased.

Question 4 from Steve in Colorado -- Just commenting on opening up additional areas to off shore drilling by President Bush has dropped the price of crude by more than $10 a barrel. Therefore why won't more drilling do the same? (Similar question from Michael in California: Speculators will bid down the price of oil if they are convinced that America will soon increase its oil drilling offshore and/or in ANWR.)

Answer: Oil prices have always been volatile and it is difficult to attribute daily price fluctuations to a single factor. In the two weeks following President Bush’s announcement on July 14, 2008, that he would rescind the Executive Order closing parts of the Outer Continental Shelf to drilling, the price of oil dropped $20. However, oil prices exhibited a similar drop between July 3rd and July 9th, before the President’s announcement, then rose again to their highest level on the very day of the President’s announcement. By the end of July, the price was rising again, jumping $4 on July 30th then backing off $2 the following day. The two-dollar drop on July 31st was attributed to “disappointing data on the United States economy [that] signaled further cutbacks in energy demand for the world’s thirstiest consumer.” MSNBC (July 31, 2008).

Most energy analysts agree that expectations that Saudi Arabia would be raising crude supplies by an additional 300,000 barrels per day (bpd) for July, on top of the extra 200,000 bpd brought on in June, coupled with reductions in global demand are the major factors in the declines in oil prices seen in July 2008.

With only 2.5 percent of the world’s oil reserves, the most effective price signal the United States can send to world markets is that it intends to reduce its demand for oil by moving to alternative energy sources and improving the efficiency of its use of petroleum products. Federal legislation that promotes clean, alternative energy and cuts global warming pollution will reduce our oil imports four times more than drilling in the pristine wildlife habitat of the Arctic National Wildlife Refuge, off our beaches, and in the Rocky Mountains combined. A study by the Massachusetts Institute of Technology, for example, found that under the Climate Security Act, U.S. petroleum consumption would drop nearly in half by 2030—saving far in excess of the amount of oil we could ever pull from Alaska or the coasts.

Question 5 from Marty in Colorado -- Renewable alternatives cannot provide adequate, reliable energy, and therefore require us to build more conventional power plants for backup.

Answer: Let me first answer the question "do increases in renewable energy require us to build more conventional power?" The answer here is no. Wind energy, for example, often displaces natural gas generation today as natural gas is commonly used for peak daytime demand. Meet 20% of our electricity needs from wind power by 2030 would displace 50% of the natural gas used for electricity and 18% of coal consumption. Also, concentrating solar power -- a technology that provides baseload power 24 hours a day -- is becoming competitive with gas- and coal-fired electricity thanks to recent advancements and the rising cost of fossil fuels.

Now let me address the question "can renewable energy, such as wind and solar, provide reliable power?" The answer here is yes -- renewable energy is already an important part of the U.S. electric utility generation mix at prices competitive with natural gas and coal in many places. For example, the U.S. Department of Energy found we could meet up to 20% of U.S. electricity needs with wind power reliably without any investments in energy storage technologies. Also new technologies coming online, such as concentrating solar power, can provide baseload power 24 hours a day.

Wind power is currently supplying 48 billion kilowatt-hours (kWh) of electricity to U.S. consumers each year, powering the equivalent of over 4.5 million homes. Minnesota and Iowa both get close to 5% of their electricity from wind power. In Europe the wind supplies even bigger shares: 20% of Denmark's electricity comes from wind power; 14% of Germany's came from wind in 2007. Both Spain and Portugal met more than 20% of their electricity needs with wind in some periods of 2007.

TAKE ACTION: Urge your representative and senators to oppose legislation that would open up more of our public lands to drilling and further America's dependence on fossil fuels