Bad news for Big Oil is thrilling for consumers – oil prices are plummeting amid economic uncertainty in Europe and the United States. Oil is now selling below $80 a barrel, and gas prices are coming down as well, which will surely be helpful to many a summer vacationer. The recent increase in domestic oil production, actually at the highest level ever, also contributes to the falling prices; the increased production is due to Bush-era leases finally starting to pump crude. Whenever drilling advocates and oil companies want more exploration leases and drilling rights, many fossil fuel opponents will rebut the request with the assertion that it takes about ten years before the oil would actually start flowing. But, as we can see from the current peak in domestic production, that is simply a silly argument. If we let oil companies drill for oil today, then ten years down the road we would have more American jobs and more success for American fuel corporations (which of course means more tax dollars for Uncle Sam, especially considering that the three largest oil companies had the highest effective tax rates of any US corporations). If we instead continue with the “it will take ten years” charade, then all we will have is green lobbyists saying exactly the same thing again.
One of the biggest controversies over oil recently has been the Keystone XL pipeline, which would carry crude from the Canadian Alberta tar sands to US refineries on the Gulf of Mexico. President Obama caved to the green wing of his party and shot down the proposal, which requires presidential approval because it crosses a US border. Constructing the planned pipeline would be a massive project and would create thousands of American jobs. Interestingly, because the actual drilling operations are occurring in Canada and are therefore outside of U.S. control, green activists have had to skip the time argument and jump to the matter of environmental safety. Drilling opponents refer to the tar sands crude as “dirty oil” because its extraction requires much more energy than normal oil wells do, which leads to higher net carbon emissions per barrel. Activists are also concerned about the perennial risk of a pipeline spill. However, the emissions argument does not hold water because the oil is going to be drilled whether or not the Keystone pipeline is built; in fact, Canadian Prime Minister Stephen Harper plans to build a similar pipeline to the Pacific in order to sell the crude to China if Obama does not allow the construction of Keystone. As for the spill concerns, it is important to realize that the United States is already crisscrossed with numerous oil pipelines; one more is not going to harm anyone. Hopefully, the president will reevaluate his decision.
So long as the United States is dependent on oil as an energy source, it only makes sense to transition towards more domestic oil (or at least oil from close allies rather than Middle Eastern dictatorships) before finally moving past nonrenewable fossil fuels to fully renewable sources of energy. If we are going to be burning oil, it might as well be American oil. The BP oil spill in the Gulf of Mexico renewed fears of the environmental and human risks of oil drilling, but that accident only occurred because the platform operators disregarded important safety regulations. Indeed, the government should create strict rules for well construction and operation and ensure that they are well-enforced; if it is done safely and with plenty of government oversight, domestic oil drilling can and will be a major source of American energy for many years to come.