MythBusters

Energy has clearly been the focus of this blog for the past several weeks, and with gas prices where they are, for good reason. People want to know what America has for energy resources and how we can access them to lower the cost of gas.

Recently, I did my best to debunk the sham "Use it or Lose it" legislation that failed in Congress with a bi-partisan majority.

I'd like to once again set the record straight about some claims that have been cited in a few recent newspaper articles. More specifically, claims made by Philip Budzik of the Energy Information Administration (EIA) that can mislead many readers against the benefits of drilling in ANWR and the Outer Continental Shelf (OCS), and of accessing our enormous oil shale supplies to help lower the cost of gas.

For instance, here's an exert from Sunday's Star Tribune:

"Bachmann was expected to visit ANWR today to underscore her desire to drill there. But opening the refuge to drilling 'is not projected to have a large impact on world oil prices' or the price of gasoline, said [Philip] Budzik of the Energy Information Administration (EIA). Tapping the refuge could cut the cost of a barrel of oil by perhaps 2 percent and shave 1 cent to 3 cents off the pump price of a gallon of gas, he said. As for the Outer Continental Shelf, the EIA said it 'would not have a significant impact" on oil prices before 2030.'

Here's what false assumptions Budzik makes in order to justify saying this:

Assumption #1: Current bans that have prevented American consumers from accessing American energy will remain in place until at least 2012

(exactly what Republicans are working to reverse – right now, not 4 years from now): “Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.”

Assumption #2: Once we finally get to the OCS, we’ll only be able to find a fraction of the oil and gas that the Minerals Management Service (MMS) – like EIA, also an agency of the Dept. of Energy – believes is out there.

What Budzik says: “With these assumptions, technically recoverable undiscovered resources in the lower 48 OCS increase to 59 billion barrels of oil and 288 trillion cubic feet of natural gas."

What MMS says: “The mean estimate for undiscovered technically recoverable resources (along our nation’s Outer Continental Shelf) totals 85.9 billion barrels of oil and 419.9 trillion cubic feet of natural gas.” (http://www.mms.gov/PDFs/2005EPAct/InventoryRTC.pdf)

Budzik should be distributing accurate energy information, not just using whatever numbers he feels.

Here's what actual economists have to say about the positive impact an increase in energy supplies will have on the cost of gasoline. This is from last week’s Financial Services Committee hearing:

Rep. Brad Sherman (D-CA): Is there any way to give a numerical answer? Would half a million barrels [of oil] a day affect the price, a quarter million?

Fed. Reserve Chairman Ben Bernanke: The short-term elasticity is … that a 1 percent increase in supply could lower prices by 10 percent.

Here are the facts: