ANWR: Two Cents a Gallon in a Generation
Menzie Chinn documents the latest pandering from McBush on energy policy and then turns to a recent economic analysis from the Energy Information Administration:
The opening of the ANWR 1002 Area to oil and natural gas development is projected to increase domestic crude oil production starting in 2018. In the mean ANWR oil resource case, additional oil production resulting from the opening of ANWR reaches 780,000 barrels per day in 2027 and then declines to 710,000 barrels per day in 2030 … Crude oil imports are projected to decline by about one barrel for every barrel of ANWR oil production … Additional oil production resulting from the opening of ANWR would be only a small portion of total world oil production, and would likely be offset in part by somewhat lower production outside the United States. 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 $0.41 per barrel (2006 dollars) in 2026 for the low oil resource case, $0.75 per barrel in 2025 for the mean oil resource case, and $1.44 per barrel in 2027 for the high oil resource case, relative to the reference case.
The median case suggests the effect on gasoline prices in 2025 will be a mere $0.02 a gallon. The immediate effect will be zero as we’ll have to wait a decade to see any oil from ANWR. If this is Bush’s and McCain’s answer to today’s high gasoline prices, it is no answer at all. Menzie closes with this observation:
Fortunately, a holiday for the gasoline tax, which works in the wrong direction for reducing energy dependence, has dropped off the table. One has to be thankful for small blessings.