ANWR Oil to Reduce Gas Prices?
Drill in The Arctic National Wildlife Refuge to Lower Fuel Prices?
May 14, 2008
Though many Americans hope drilling in the Arctic National Wildlife Refuge will significantly reduce fuel costs, several government reports suggest otherwise. A 2004 report from the US Department of Energy states that oil from ANWR could possibly reduce American dependence on foreign oil imports by 4% (from 70% to 66%) by the year 2025.
Assessments of Oil and Gas Potential in ANWR
At least eight assessments of potential petroleum reserves in the Arctic National Wildlife Refuge have been conducted over the last two decades.
- One by the Alaska Department of Oil and Gas
- One by the Energy Information Administration (EIA) of the US Department of Energy
- Three by the Bureau of Land Management (BLM)
- Three by the United States Geological Survey (USGS)
The results of the assessments vary somewhat due to technological developments that have been made over the years; a variety of assessment procedures that have been used; recent development of cost-saving methods for recovering oil; and the definition of "recoverable oil" used by the assessors.
Technically vs. Economically Feasible Oil Recovery
All eight government assessments contain estimates of the potential oil reserves present on the ANWR Coastal Plain. Some of the reports focus on technically recoverable petroleum. However, since oil is not uniformly distributed throughout the coastal plain, the cost of recovering remote, isolated pockets of oil could substantially exceed the potential income from that oil. For this reason, other assessments pragmatically consider only economically recoverable deposits, that is, oil deposits that can be profitably developed.
Estimates of Oil Reserves in ANWR
The United States Geological Survey report estimates that between 5.7 and 16 billion barrels of oil are technically recoverable oil in ANWR, with the economically recoverable supply believed to be about 10.4 billion barrels. The Energy Information Agency estimates that when full production is reached, ANWR is capable of producing approximately 876,000 barrels of oil per day. Current oil consumption in the United States is 18.5 million barrels a day.
Effect of ANWR Oil on Gas Prices
Oil from the ANWR Coastal Plain would potentially supply 5% of US oil demands annually. This relatively small percent of oil would have a correspondingly small effect on world wide oil prices. The US Department of Energy estimates that oil from ANWR could reduce the price of oil by thirty to fifty cents a barrel. Currently oil prices are hovering close to the $120 a barrel mark, so the effect of ANWR oil on prices at the gas pump would be scarcely noticed by consumers.
