To Drill, or Not To Drill

06.19.08 | 2 Comments

Offshore oil rig near Santa Barbara
Oil Rig off Santa Barbara coast
Attribution: MarineBio.org

That is the question.

And given my position on energy matters, the answer might be a little surprising. First off, I’ll state flatly that drilling will not affect gas prices in the near term at all. Folks, the days of less than $4/gallon gasoline are gone and they are not coming back. We have scarce resource coupled with increasing global demand catalyzed by weak currency because of our collective poor fiscal discipline. As much as anyone would like to believe there’s a quick fix to this issue, there isn’t. Not only that, no single action will break the upward pressure on fuel prices.

So, should we drill? The answer is yes, responsibly, and we should do so not with the idea that it will bring back cheap gas, but with the understanding it might prevent $10/gallon prices in the next couple of years. Is it the long term answer? No, absolutely not. It is nothing more than a band aid solution that might ease some pressure in the mid-term, but it’s no solution. Just because it doesn’t solve the problem though doesn’t mean we shouldn’t consider taking pressure off the markets PROVIDED we use the time such a measure purchases to address the core problem: energy dependence on a finite resource supplied by people who hate us. If that’s not motivation, I don’t know what is…

What about biofuels? They too are part of the answer, though corn-based fuels don’t make a great deal of economic sense, they can be part of the solution and provide a bridge toward energy independence. Like drilling, why not? Band aids are underrated as a tool. But, this too is only a measure that buys time, it doesn’t solve the problem.

The only sensible and practical long term approach to the transportation energy problem is a wholesale shift toward electric vehicles over a 20 year horizon. There are some technical problems left to conquer in this move, but it’s the viable alternative that will enable the mobile lifestyle we enjoy with economics that are preferential to the combustion engine technology of last millennium.

Those among you who are familiar with energy will say “but you’re just shifting the problem to the electrical supply infrastructure which is in poor repair and don’t you know 50% of our electricity comes from dirty coal today?” To them I say, you’re right. It is just shifting the problem, but that’s a problem we CAN solve within our resource envelope by applying investment and focus to increasing the harvest of our resources (renewable, fossil, and nuclear) in a reasonable and measured way.

With technologies that exist today, we could be energy independent as a nation within 20 years if only we had the will to do what was required. And, this would create the largest business opportunity of the last 1,000 years if we choose to go down this path. The bad news is, if we don’t choose to do so of our own accord while there are many options to solve the problem, we will be forced to do so because our ability to pay for our present lifestyle will cease to exist.

If you’re interested in details about how we become energy independent over the next 20 years, I refer you to an earlier post on this subject from last year which addresses these issues in detail.