Recently their have been a lot of calls from Republican politicians to open up ANWR for drilling in order to lower gas prices. Having done my homework on this issue I believe that those that are doing so are either ignorant of the facts or have an ulterior motive that has almost nothing to do with lowering gas prices.
ANWR is estimated to be able to produce two million barrels of oil a day. Since America uses about 20 million barrels a day thats a pretty impressive amount. The problem is that that the Alaskan pipeline can only transport 2.1 million barrels a day and its already moving an average of 650k barrels a day which means its remaining capacity for carrying oil produced from drilling at ANWR would be 1,450,000 barrels on average. Thats still a good bit. However the additional problem is that since crude oil's price is set by a world wide market that currently consumes roughly 90 million barrels a day. So even if all of ANWR's oil is used only by Americans (say through a clause in the drilling rights lease) then it would only offset an equivalent amount of imported oil (a good thing) however it would only represent a 1.6 percent increase in global supply thereby resulting in an equal price drop. With gas currently at four dollars a gallon that would only equal a 6.4 cent per gallon decrease in prices at best1.
Don't get me wrong. The one real benefit of drilling in ANWR would be significantly decreasing the amount of foreign oil we consume thereby decreasing the amount of money we pay to oil producing nations that support terrorism. That alone makes it an idea worth discussing. But any politician that tells you that drilling in ANWR is a real solution to lowering gas prices either doesn't have their facts straight or are beholden to certain campaign contributers. (You can find out which here)
The DOE thinks that drilling ANWR would have even less of an effect than I predicted. Net savings? Seventy five cents a barrel.
Thanks to The Moderate Voice, EconoPundit, SUV Mama, The Glittering Eye, Newshoggers, Right Wing News, The Q and O Blog, WeOpEd, and Memeorandum for linking to this post.
1: Sentence edited for clarity
19 minutes ago