Myths, Half-Truths and Other Bits of Trivia

Myths, Half-Truths and Other Bits of Trivia I had hoped to debunk a few myths about the oil industry this month. Unfortunately, there are so many myths at both ends of the spectrum that it is difficult to know where to start. There seems to be an element of truth in most of them regardless of their orientation. In some cases, the element of truth may be very small. In other cases, it is a matter of semantics. Such as the “myth” that contends that production from the Arctic National Wildlife Refuge will do little to reduce our dependence on oil imports from Saudi Arabia; therefore, it does not justify exploiting a pristine wilderness. The first part of that statement is probably true on two levels. The United States imports more oil from Canada, Mexico and Venezuela than it does from Saudi Arabia, thus any imports that may be offset could be allocated across the board and the specific reduction on Saudi oil would be limited. In addition, any production that may ultimately come from the Arctic National Wildlife Refuge is several years in the future, if it ever comes, and would likely do more to offset the declining production of the lower 48 states and the North Slope than reduce imports. Hence, the myth is partly correct. It just depends on how you look at it. The probability that any myth could be convincingly debunked is probably low. Of course, long odds do not keep us from drilling wells, and they do not keep me from tilting windmills. There are a couple of myths that can be addressed and at least partially debunked. The first is that the oil industry owns Washington, DC. Since money and influence are virtually synonymous in DC, this contention is probably based on the amount of political contributions that come from oil and gas sources. However, the $26 million the oil and gas industry contributed during the 2004 elections ranked 16th among the various industries tracked by The Center for Responsive Politics — far behind such notables as lawyers and law firms ($182 million), real estate ($96 million), securities and investments ($91 million), and health professionals ($74 million). If money talks, it is no surprise that lawyers have such a large influence inside the DC beltway.Much has been made in the media of the oil industry’s (especially Enron’s) long-term planning than extreme price fluctuations. A predictable market takes some of the risk out of large investment decisions. I need to credit the Wilderness Society for pointing out how effective fuel efficiency can be in reducing oil consumption, although I think it may have misquoted the EPA. The original quote is “According to the Environmental Protection Agency, increasing fuel efficiency standards for new vehicles by just 3 miles per gallon would save more than 1 million barrels of oil per day.” My initial thought was that this was an exaggeration of some magnitude. However, that is a true statement if it is applied to the average fuel efficiency of the entire fleet of automobiles and light trucks on the road today and not merely to the new vehicles. The 240 million automobiles and light trucks in the United States consume approximately 380 million gallons of gasoline per day with an average fuel efficiency of approximately 20 mpg. That means Americans drive about 7.6 billion miles or 32 miles per vehicle every day. The fuel efficiency numbers work when applied to the total automotive fleet; increasing the average fuel efficiency to 23 mpg will indeed save 1 million barrels of oil per day. It is not a myth; a 15% increase in average fuel efficiency on all automobiles and light trucks will ultimately result in a 5% reduction in US oil consumption.

Paul Britt
Wednesday, March 29, 2006
From the President