Economics Professors Defend McCain’s Energy Policy
With all due respect to Professor Feldstein, this view is not shared by many prominent economists, including some of those employed by the U.S. government to forecast future energy prices. As we’ve noted before, the Energy Information Agency — the federal agency that provides official energy statistics — recently concluded that increased offshore drilling would not affect oil and natural gas prices until 2030, and even then the effect would be negligible. From the EIA:
The projections in the [Outer-Continental Shelf] access case indicate that access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017. Total domestic production of crude oil from 2012 through 2030 in the OCS access case is projected to be 1.6 percent higher than in the reference case, and 3 percent higher in 2030 alone, at 5.6 million barrels per day. For the lower 48 OCS, annual crude oil production in 2030 is projected to be 7 percent higher—2.4 million barrels per day in the OCS access case compared with 2.2 million barrels per day in the reference case. Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.
It is true that in recent days, the average gas price has dipped a little. Still, I would ask Professor Feldstein the following questions: Is $4 per gallon gasoline — or $125 per barrel oil — not incentive enough for oil producers to pump as much oil as they possibly can and sell it on the market? Is there any evidence of oil producers "hoarding" or "inventorying" oil, or "failing to bring it out of the ground?"