Bush drilling plan wouldn't have eased pump prices

WASHINGTON Tue Apr 29, 2008 6:41pm BST

WASHINGTON (Reuters) - The Bush administration says the United States would be less addicted to foreign oil and fuel prices would be lower if Congress had only opened up Alaska's Arctic National Wildlife Refuge to drilling.

But that claim doesn't reflect the long lead time to develop the refuge's huge oil reserves, which would not be available for several more years and initial volumes would still be small if Congress in 2002 had approved the administration's plan to drill in ANWR, energy experts say.

President George W. Bush during his first year in office made giving energy companies access to the estimated 10 billion barrels of crude in the refuge the centerpiece of his national energy policy that sprouted from Vice President Dick Cheney's controversial and secretive energy task force.

With gasoline prices soaring to records in recent weeks, Bush has stepped up his argument that ANWR oil is a solution.

"We should have been exploring for oil and gas in ANWR," he said last week when asked about record pump costs. "But, no, we made the decision and our Congress kept preventing us from opening up new areas to explore in environmentally friendly ways and now we're becoming, as a result, more and more dependent on foreign sources of oil."

Congress has tried several times in Bush's two terms to pass legislation to finally open the refuge to energy exploration, but always fell a few votes short due in part to concern over what drilling would do to ANWR's wildlife.

"They've repeatedly blocked environmentally safe exploration in ANWR," Bush complained to reporters on Tuesday at a Rose Garden press conference. He said oil supplies from the refuge "would likely mean lower gas prices."

The Energy Information Administration, which is the Energy Department's independent analytical arm, estimated that if Congress had cleared Bush's ANWR drilling plan the oil would have been available to refiners in 2011, but only at a small volume of 40,000 barrels a day -- a drop in the bucket compared with the 20.6 million barrels the U.S. consumes daily.

At peak production, ANWR could have potentially added 780,000 barrels a day to U.S. crude oil output by 2020, according to the EIA.

The extra supplies would have cut dependence on foreign oil, but only slightly. With ANWR crude, imports would have met 60 percent of U.S. oil demand in 2020, down from 62 percent without the refuge's supplies.

All three leading presidential candidates, Democrats Barack Obama and Hillary Clinton and Republican John McCain, are against oil drilling in the refuge.

The administration says if Congress had acted sooner, U.S. drivers would be getting relief at the pump from the extra oil supplies in the market.

"Opening up ANWR is not long term," Bush said Tuesday.

But both government and private energy experts say Bush is overly optimistic that ANWR oil would be flowing now if Congress had approved his drilling plan back in 2002, because of the years needed to find the crude and develop the fields.

"I would say under the best of circumstances it would take approximately 10 years" for any ANWR oil to make it into the market, said Philip Budzik, an EIA analyst.

"Even if oil was flowing, it would be too small amount to reduce the price" of crude or gasoline, said Daniel Weiss, energy expert at the Center for American Progress, a think tank in Washington.

"President Bush's claim ignores the primary causes behind record high oil prices: a cheap dollar, high demand from China and India, and speculators driving the price up. Drilling and sullying the Arctic would not address any of these causes of high oil prices," said Weiss.

White House spokesman Scott Stanzel disputed Bush has implied ANWR oil would be available today if his drilling plan was approved in 2002. "He didn't say my 2002 vote," Stanzel said. However, he could not clarify whose drilling plan the president was talking about.

Gerald Kepes, head of the upstream oil and gas practice at the PFC Energy consulting group, said if the Interior Department had begun leasing tracts in ANWR in 2003 the first oil would had probably been flowing in 2012.

"This all assumes that there would be no environmental challenges," said Kepes, as lawsuits to block drilling could take years to resolve. "Really, 2015 is more then likely."

Opening ANWR could have made current prices worse because Saudi Arabia may have delayed increasing its oil production capacity, making world supplies tighter and prices higher.

"Since there is a worldwide market for oil, increases in production in one place (like ANWR) could be offset by decreases in production someplace else to keep the prices high," CAP's Weiss said.

(Reporting by Tom Doggett; Editing by Marguerita Choy)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.