Thunderhorse oil platform in the Gulf of Mexico.Myth: Opening offshore waters in the U.S. to oil exploration will (a) significantly increase domestic production, and (2) put downward pressure on oil prices.

Evidence: The federal government controls access to the Outer Continental Shelf (OCS), which refers to the submerged lands under the ocean farther than about three miles  the coast (land closer than that is under state jurisdiction).  Beginning in 1982, Congress passed and has subsequently renewed moratoria on the leasing of federal land off the coast of all states except Texas, Louisiana and parts of Alaska. All existing moratoria on leasing in the OCS will expire in 2012.  Debate now centers on whether or not to renew the moratoria.

The Minerals Management Service (MMS) of the U.S. Department of Interior estimates that there are about 86 billion barrels of technically recoverable oil in the federal Outer Continental Shelf; the  Lower 48 OCS accounts for about 59 billion barrels. The Energy Information Administration (EIA) of the U.S. Department of Energy used the MMS data to asses what impact a lifting of the ban in 2012 for the Lower 48 OCS would have on U.S. oil production. Basically, the EIA estimated what fraction of the technically recoverable oil would be economical to recover, and how fast it could be produced after 2012.  Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. The EIA found that access to the Pacific, Atlantic, and eastern Gulf of Mexico regions would not have a significant impact on domestic crude oil production or prices before 2030. Total domestic production of crude oil from 2012 through 2030 is projected to be 1.6 percent higher than in EIA's  "no access" reference case.

The effect of that flow of oil on the price of oil would be indiscernible. Oil prices are determined on the international market, and the addition of about 0.16 million barrels per day from the OCS in 2030 to total world oil production would have no significant impact on oil market fundamentals. The world consumed about 86 million barrels per day in 2007, and will consume about 112 million barrels per day in 2030, according to EIA forecasts.

Adding the Alaska OCS to the mix would not appreciably alter this conclusion, as that oil would be even more costly and in terms of dollars and time compared to Lower 48 OCS resources.

Verdict:  False in the case of both production and prices.

Sources

• Energy Information Administration, Impacts of Increased Access to Oil and Natural Gas Resources in the Lower 48 Federal Outer Continental Shelf, Annual Energy Review 2007.
• Minerals Management Service, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Nation’s Outer Continental Shelf, 2006.