Opening ANWR cuts gas prices $0.02 in 2025
In the climate and energy debate, conservatives continue to argue that the only solution to high gasoline prices is drill, drill, drill, especially in the Arctic National Wildlife Refuge. This argument is false, false, false.
The Administration’s own Energy Information Administration found differently in a 2004 Congressionally-requested “Analysis of Oil and Gas Production in ANWR” (see “Note to Bush, media: Opening ANWR cuts gas prices one cent in 2025“). I pointed out then that the 2004 analysis was based on low oil prices, and that higher oil prices would raise the savings.
A May 2008 re-analysis [PDF] by EIA, “Analysis of Crude Oil Production in the Arctic National Wildlife Refuge,” in fact found this:
In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 …
The opening of ANWR is projected to have its largest oil price reduction impacts as follows: a reduction in low-sulfur, light crude oil prices of … $0.75 per barrel in 2025 for the mean oil resource case …
There are 42 gallons in a barrel, so that’ll be about two cents a gallon. I’ve said it before and I’ll say it again: Don’t spend it all in one place, America.
Now, in “fairness” to the EIA, they have gone from a 2004 prediction that world oil price in 2025 of $27 per barrel (2002 dollars) to a May 2008 prediction that oil in 2030 will be a mere $70 a barrel (in 2006 dollars).
(Note to self: Find out what EIA forecasters are smoking and stay far away from it.)
This mainly proves the EIA is really lousy at energy forecasting (see “Peak Oil? Bring it on!“).
Let me propose a rule of thumb based on the EIA analyses: ANWR will cut future gasoline prices about 1 percent. You can pick your own gasoline price in 2030 and do the math.
If we want to avoid gasoline prices, $6 or $7 a gallon and then much more, we need to get off of oil as our primary transportation fuel ASAP. That, of course, is a primary goal of climate legislation.