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"This is one emergency we can't drill our way out of." – Oil man T. Boone Pickens

Let's face it. The world currently produces about three times more oil than it discovers in a given period. It doesn't take a mathematician to understand we're using oil faster than it can be replaced. Nonetheless, there's little reason to believe the geopolitics of petroleum will change anytime soon.

We all know the demand for oil is primarily fueled (pun intended) by transportation. Populations are growing, and there's a worldwide clamor for automobiles, especially in industrially-developing countries such as India and China.

Many more gasoline-powered vehicles on the roads of the world will offset improvements in vehicle efficiency. Petroleum consumption will rise, and rise exponentially. If present trends continue unabated, experts warn the world will use more energy over the next 50 years than in all of previously recorded history. What's not so clear is how unbridled growth and the ceaseless quest for oil will affect the planet's environment, but there are already ominous signs that we should heed.

Right now, election year energy brouhaha in the US is reaching astronomical heights, raising the question: why not drill for the estimated 18 billion barrels of oil that exists off the coast of the United States? If the ban on offshore oil drilling were to be lifted, would it result in a gush of petroleum, and reduce our reliance on foreign oil? Would it lower oil prices?

Government Facts

Regardless of candidate John McCain and the Republican crowd incessantly shouting, "Drill, baby, drill," the Federal government emphatically disagrees. The most recent annual report from the Energy Information Administration (EIA), entitled Annual Energy Outlook 2008, indicates that even if the ban were to be lifted immediately, no oil gleaned from offshore drilling would reach the marketplace until 2017. Let's get real. That's more than two more election cycles from now. John McCain (but hopefully not his oilman legacy) will probably be dead and gone by then.

The EIA Annual Energy Outlook is a well-documented report that includes a striking reference case, plus many examinations of energy markets. The Outlook analyzes US energy supply, demand, and prices through the year 2030, with projections based on results from the EIA's highly respected National Energy Modeling System.

According to the EIA's weighty report, any extra oil from offshore drilling will have virtually no effect on the price of a barrel of oil. In its 2007 paper, the Energy Information Administration said, "Because oil prices are determined on an international market, any impact on average well-head prices is expected to be insignificant."

What About ANWR?

How about the Arctic National Wildlife Refuge? The EIA says if we start drilling in ANWR now it will result in oil production in 2018. Another ten years, eh?

The federal government concedes ANWR oil will indeed affect petroleum pricing, reducing the price of oil by about 75 cents a barrel. If we're very lucky, says the EIA, we may see a price reduction of $1.44 per barrel. Whoop-de-doo. Even at best-case, what's that trifling increment going to do for the cost of gasoline at the pump?

Regardless of how much a barrel of oil will cost, cites the EIA, these reduction won't happen for at least 17 years. The report also indicates that ANWR's 1.2% contribution to the worldwide oil supply, "would likely be offset by lowered production outside of the US." That means the price of a barrel of oil will remain more or less what the Organization of the Petroleum Exporting Countries wants it to be.

Check it out. OPEC's proven reserves currently stand well above 900 billion barrels, so OPEC can simply adjust production to keep the supply versus demand curve balanced at whatever price point keeps its members driving Lamborghini automobiles and purchasing AWACS aircraft. If OPEC controls pricing, consumers in the United States and elsewhere in the world will send petro-dollars to Saudi Arabia and Iran – and Iraq – for decades to come.

At current oil prices, US consumers will send $700 billion dollars to OPEC this year alone. Over the next decade the cost will near $10 trillion, representing, to quote Mr. Pickens, the biggest transfer of wealth in world history. There's likely to be a lot more bloodletting, too. But that’s good business if you’re a military-aerospace supplier.

Are you listening, Senator McCain?