With the ongoing record surge in the price of oil against declining supplies, there’s renewed clamor from oil companies and some politicians for drilling in protected areas, such as the Arctic National Wildlife Refuge and offshore locations along the East and West Coasts.
But don’t shed a tear for Big Oil as it begs for more drilling. According to a report from CNNMoney.com, oil companies aren’t producing oil on 70 million of the 90 million offshore acres for which they already have drilling leases. The majority of these permits are for locations in the Gulf of Mexico.
Oil companies need to “finish what’s on their plate before they go back in line,” says Oppenheimer analyst Fadel Gheit in the CNN article.
For their part, the oil companies say it takes years of research and exploration before drilling can begin in a specific area.
This is basically true, and few think Big Oil is hoarding oil (why would they given record prices?). But how long have those leases gone unused? It does seem likely that the oil industry is holding out hope for drilling in federal lands, such as the Arctic Refuge, which would be much less expensive to tap than locations deep within the ocean.
About 8 million barrels of oil are produced every day in the United States (versus 21 million consumed). A report from the Energy Information Administration, Analysis of Crude Oil Production in the Arctic National Wildlife Refuge, projects that oil production from the Arctic Refuge could be between 1.9 and 4.3 billion barrels over the course of 12 years, with the most likely scenario being 2.6 billion.