Here’s one of the little Koses — offering an Open Letter to the President inviting him to explain why/how opening up the continental shelf to oil drilling would lower the price of oil. Since the Pres is probably busy, I’ll be a stand-in:
Just wondering, by how many cents would you estimate that gasoline
prices at the pump would drop if the entire continental shelf was
opened to oil drilling?
If futures markets were equipped with crystal balls, there would be no futures market. Determining a future price would be the crystal ball equivalent. So the question betrays more than a little economic ignorance. I don’t expect lefties to understand market uncertainties any more than I expect lefties to understand that the prospect of increased supply – particularly opening the entire Atlantic coast – would lower the price per barrel due to changes in forecast availability (often derided by the ignorant as unfair "speculation".) But by how much? We don’t know.
how much more would the price at the pump drop in that scenario than if
current leaseholders merely drilled on the 68 million acres of oil and
gas leases already granted on Federal lands which stand unused?
If it’s still not cost-effective to drill in these areas, they won’t drill. But more importantly, we must also consider that most known/accessible stocks are already factored into the price per barrel. This is the beauty of the distributed knowledge that those evil speculators bring to the process. So only new potential supplies would change the speculative landscape and thus the price per barrel (and price per gallon).
would such savings be realized, and would that date come earlier than,
say, the development of a domestically produced hydrogen-powered
Who knows? No one, does. But it’s funny how lefties are eager to keep us at $4+ per gallon so they can pin all their hopes on their favored venture–which may or may not be realized in the future. Millions of market actors and investors are much better at teasing out this information. If hydrogen is viable, it will overtake gas in the same way gas overtook horses and buggies and petroleum overtook coal engines, and coal engines overtook whale oil. It’s called the market process and it runs on price signals. If Stalin and the central committee had all the knowledge about what makes an economy tick, we wouldn’t have found 1940s-era factories in Russia after the Collapse (1990s).
Finally, how do you expect companies to
come up with the intensive capital investment such an overwhelming
increase in domestic drilling would require while lowering prices?
The same way they came up with the capital to drill from 1000 – 10000 feet using expensive platforms in the Gulf of Mexico. If they couldn’t come up with the capital, a de facto moratorium would remain. So what do you care? Might as well let ’em drill.
Happy to offer an economics lesson for a lefty. And since I know that this particular lefty hates to be referred to intellectuals and experts, I’ll go ahead and link to one that explains why price signals, human ingenuity and distributed knowledge mean will never need to (nor would want to) put energy policy in the hands of government. (Julian Simon)