Out of Alaska

This is the twentieth anniversary of Exxon's 11 million gallon oil spill in Prince William Sound in Alaska. The scum got out of about $2 billion of a judgment against them last year on the argument that shipping is special and above the law. While they may be able to play fast and loose with that law, the law of just deserts might still come up and bite them.

There is a whole lot of noise about energy independence these days. And while Exxon figures it is going to be importing oil for a long time, it does not mind the possibility of getting low cost oil leases and favorable tax treatment for oil on federal land. So, they give a lot of money to the "drill booboo drill" crowd to make noise about how we could get all the oil we need if we just drilled more oil wells domestically. These people are completely wrong but they are loud because they get all that money to say these things. They are wrong because essentially no amount of effort can produce what we consume domestically. There are only three years of recoverable oil in the ground and we can't make oil wells flow fast enough to bring all that up in three years. It is very unlikely that US production will do anything but decline for the next twenty years.

So, what would it take to get energy independence? We would have to stop using oil for the most part. The promise of the Obama administration is that we will get there in ten years. That means cutting about 13 million barrels a day of imports plus whatever decline in domestic production occurs in that time. Cutting consumption at that rate should keep the price of oil fairly low during that time, perhaps around $35/barrel. But, holding the price of oil down to that level means that there is very little new domestic oil that would be worth developing since we've already developed all of the cheap oil here. Thus, in a very real way, energy independence means not drilling for oil in the US. Continuing energy independence beyond that 10 year goal implies continuing to cut consumption as domestic supplies continue to decline. but if we do that, then we extend the period over which the world price of oil remains low and there remains no incentive to develop more domestic supply. Thus, it would seem that pushing the energy independence idea yields a smaller oil business sooner than otherwise. If this means that Exxon loses a trillion dollars or so, then perhaps the punishment they avoided for their oil spill will come right back to them.