Support for Energy Exploration Rises

I was recently pointed to a new survey on energy conducted by the Pew Research Center for the People & the Press. I have to admit that I do not know the political leanings (if any) of this organization. The surveys on their homepage looked pretty balanced to me. Regardless, I was pretty surprised at the results of the survey, a summary of which can be found here.

Source: Pew Research Center

As Gas Prices Pinch, Support for Energy Exploration Rises

The public’s changing energy priorities are most evident in the growing percentage that views increased energy exploration – including mining and drilling, as well as the construction of new power plants – as a more important priority for energy policy than increased conservation and regulation. Nearly half (47%) now rates energy exploration as the more important priority, up from 35% in February. The proportion saying it is more important to increase energy conservation and regulation has declined by 10 points (from 55% to 45%).

The survey found a sharp shift among nearly all demographics toward increased oil exploration. The biggest shift came among those surveyed who either described themselves as young (+25% shift since February) or liberal (+23% shift since February). In fact, the poll found that support for increased exploration is now even higher among Democrats (46% in favor) than among Republicans (43%). Oddly, Republicans registered a 6% drop in support for increased exploration compared to the February poll, while Democrats registered a 16% gain in support for increased exploration.

There were still sharp contrasts on the topic of drilling in ANWR. 75% of Republicans favored this, while only 36% of Democrats did. The poll also showed a trend of greater support for ANWR drilling at successively greater age groupings. Only 37% of those 18-29 were in support of ANWR drilling, while 62% of those over 65 favored ANWR drilling.

The poll also asked about views on the war in Iraq, but these had changed little since the last survey in February.

I have been asked a number of times for my own views on this topic, and I will soon post something on the subject.

23 thoughts on “Support for Energy Exploration Rises”

  1. Too bad this isn’t being talked about in the news with any meaningful context.

    I’m sure if you asked “If you could save 4-8 cents a gallon 10-20 years from now, would that be worth it”, you’d get an entirely different poll response.

  2. Too bad this isn’t being talked about in the news with any meaningful context.

    I ran across that a few days ago, and almost linked to it here. But since the new report is coming out in “a couple of days”, I thought I would just wait until then and post the most recent estimates.

  3. So Grey – that would be the same EIA that forecast $80 crude prices and $2.50 gasoline this year? The EIA does a very good job tracking production and consumption of energy and estimating inventory levels. Their track record for pricing forecasts – not so good.

    What appears to be driving prices upward now is the long term prospects for oil supplies. Two years ago prices were near $50, demand hasn’t risen dramatically since then, if anything it has been flat. What has changed in that time is Venezuela moving to nationalize assets and a Democrat congress was elected which guarantees that the 1002 or the “national mosquito refuge” won’t get drilled.

    Dr. Walter Williams, an economist from George Mason University does a pretty good job explaining this:
    Scapegoating Speculators

    Some politicians pooh-pooh calls for drilling, saying it would take five or 10 years to recover the oil. I guarantee you we would begin to see a reduction in today’s prices even if it took five to 10 years for us to get the first barrel. Put yourself in the place of an OPEC member knowing there would be a greater supply of U.S. oil five or 10 years, hence maybe driving oil prices lower to say $40 a barrel. What will you want to do now while oil is $130 a barrel? You would want to sell as much oil now and OPEC’s collective efforts to do so would put downward pressures on current oil prices. Right now the U.S. Congress is OPEC’s staunchest ally.

  4. One time I saw a video with RFK Jr. at the 1002 National Mosquito Refuge. He had netting over his head and was swatting away bugs the size of birds. He looked totally miserable.

    But not to worry, AGW will melt all the arctic pack ice so we can catch cruise ships from NYC to beach resorts on the 1002.

    The genius oil forecasters at Grist tell us the pack ice is gone and the oceans are warming and we are all DOOMED.

    Well maybe not – satellite shows arctic ice still unmelted.

    So much for AGW this year. But we are likely to get treated to a lot of commercials like this .

    Energy speculators are telling us that it is time for a change – in leadership in congress.

  5. Fact is we need to pull out all the stops to meet this energy challenge, including produce more of our domestic resources.

    Activist groups, sensing they’re on the losing side of public opinion on this issue, are trying to deflect the public with silly speculation about pricing years out. Try asking other questions like, would you rather see more of the price of gas going to Americans than to OPEC countries, or how would you like to have less food, plastic materials for medical uses, etc.

  6. KingofKaty-
    And Jeb Bush. The Governor of Florida, (R) has vowed to halt any drilling off Florida.
    Funny how Republicans turn into greenie-weenies when it is their beach under consideration. Try drilling for oil in Newport Beach, CA. Sheesh, try building an condo tower there. And don’t propose a major airport in Orange County (R-Party stronghold). You won’t be able to do it. They voted down converting El Toro into a needed large airport.
    Personally, I favor drilling for oil on the shelf; blowouts are rare, and the platforms can be made into marine habitats. I also think shale oil, using the Shell in situ process, could be huge, huge.
    But from what I see, everybody turns into a greenie-weenie when the rendering plant is proposed for the neighborhood.

  7. The statistics that Robert highlights in his article about the drop in the number of people supporting increased energy conservation is the most important part of the article. This perfectly captures the American mindset of “It’s anybody else’s fault but our own”, and furthermore they believe that this problem can be fixed at the drop of a hat. The simple truth is that the only way to significantly cut energy prices in the short term (for the individual) is through personal conservation.

    Also it is perfectly shown that nobody in Washington understands the situation. Bush wants to drill offshore and in ANWR. This won’t help us because it will have no immediate effect on the supply of fuel. And it will be years (after the lawsuits from environmental groups and barriers from the democratic congress and likely to be next president are overcome) before the oil companies finish construction and actually start producing oil. And the Democrats plan on imposing more regulation and are dealing out even more subsidies for biofuels. Not to mention both sides are putting almost all of the blame on speculators and support a gas tax holiday. None of these “solutions” will get us anywhere.

    The bottom line is that I think that the high energy prices are a good thing because they will help us get over ourselves and maybe then we’ll start to conserve a little.

  8. What appears to be driving prices upward now is the long term prospects for oil supplies. Two years ago prices were near $50, demand hasn’t risen dramatically since then, if anything it has been flat.

    Well, gee, the future’s market is working: future probabilities are being reflected in today’s price. Gods knows, this might even lead to changes in personal behavior, to bring them more into line with reality. Can’t have that, now can we?

    Of course not. Much better to do everything we can to alleviate the perception of near-term shortage.
    And leave our descendants to face exactly the same problem, which is the inevitable consequence of treating a finite resource like it was infinte. Except that they won’t have the reserves that we have, to help them through the transition that must come sooner or later.

    (Funny how the market-ideologs lose their religion when the market starts reflecting unpleasant realities.)

  9. Questions for Robert:

    The claim is being made (on Grist and elsewhere) that the oil companies already have leases on an estimated 38 Gbbl worth of offshore reserve, while the reserves that are currently on the table amount of 10-18 Gbbl (depending on whether or not California’s offshore is included). If that is the case, it doesn’t seem to make alot of sense for the oil companies to pursue additional leases when they don’t even have the equipment on hand to exploit the ones they have.

    Two questions then:
    1) Is the basic information (38 Gbbl existing offshore reserves) true?
    2) If so, why do they want access to additional offshore reserves? Are the reserves that are up for grabs easier to access, or in some other way superior? Or is it just a matter of taking advantage of the current stress over gas prices to lock in future access to these reserves? (The latter explanation only makes sense, though, if the oil companies believe that the stress over oil/gas prices is higher now than it will be in the future, which seems unlikely to say the least).


  10. Well so did Charlie Crist, the current governor of Florida. But he changed his mind as prices increased. Conditions have changed since President Bush originally put the ban in place in 1990.

    Democrats comlain that the US doesn’t have an energy policy. In his second week in office President Bush commissioned a National Energy Policy study . The report was released in May 2001. Rather than read it (which I did cover-to-cover on the day it was released) and comment on the merits of the study itself, the Democrat Party chose to play politics and discuss who may or may not have met with the VP. A game they continue to play every time an oil company executive testifies on Capital Hill. The Democrats turn around and complain that the President has no energy policy.

    Read chapter 4 on conservation and chapter 6 on renewables. Had the country embraced elements of the NEPG plan, we might not be in the situation we are today. Rather the Democrats saw an opportunity to play politics at the expense of consumers.

    So now this issue is coming back to bite them.

  11. ~ “The public’s changing energy priorities are most evident in the growing percentage that views increased energy exploration as a more important priority for energy policy than increased conservation and regulation.”

    Four dollar a gallon gasoline is a powerful catalyst and motivator — for even the most dedicated tree-hugger or spotted-owl lover.

  12. Green – take a look at MMS Gulf Lease Map

    You can see that most of the easy to access potential oil and gas reserves near shore have already been leased or developed. The remaining reserves are hundreds of miles offshore in 6,000 feet of water or more. They are very expensive to develop. The pipeline infrastructure doesn’t extend out that far. Getting at these reserves would be very expensive.

    Now compare this to the National Mosquito Refuge. The proposed 1002drilling area is just 70-100 miles from Prudhoe Bay and the inlet to the TransAlaskan Pipeline. TAPS was originally designed for 2 million barrels per day but is only pumping 800 thousand barrels. The 1002 could take advantage of existing infrastructure.

    In California there is also existing pipelines and other oil infrastructure which would be employed for development.

    In the eastern gulf, there is the Destin Dome, a natural gas field with 2.5 – 4 TCF of natural gas reserves. The dome lies 25 miles south of Destin, FL. There is a pipeline that goes from Mobile, AL to Tampa close to the exploration area.

    So it isn’t just the volume of the reserves, it is where they are and how expensive it is to develop and then transport them to market. Greater access means more development.

  13. KingofKaty–

    I would like to believe in one of our two major parties on nearly any major issue, but I just can’t. Let’s see, since Clinton left office:

    1. National debt has ballooned.
    2. Trade debt has ballooned.
    3. Dollar has tanked.
    4. Dow Jones Industrial Average has gone nowhere (tripled under Clinton).
    5. Financial institutions have tanked, housing market has tanked.
    6. Nothing done on immigration.
    7. $1 trillion spent in Iraq, and we can’t get out until 2011, or 2013, or 2108.
    8. Oil has gone from $20 a barrel to almost $150.
    9. Inflation?
    10. US car fleet and average mpg?

    This is a rotten record. If you find something to believe in, let me know. The R-party had the White House, both houses of Congress and the Supreme Cpourt for most of this period. Sheesh.
    And yeah, Obama doesn’t have any real plans either.

  14. Two years ago prices were near $50, demand hasn’t risen dramatically since then,….

    Demand hasn’t risen dramatically since then because of the steep price rise.

    Dr. Walter Williams, an economist from George Mason University….

    More evidence there are way too many drugs on campus. OPEC is already selling all they can. They have no capacity to suddenly increase oil sales in fear of a potential incremental million bpd five years from now. And even if they did have the capacity, that’s simply not the way they think. How did OPEC react to many millions of bpd of actual new production from Alaska, North Sea, etc. the last time around? Did they increase production in advance of the price drop? No, they slashed production massively in an effort to support prices.

    That said, the EIA’s 4-8 cent guess is useless and we absolutely should drill. It’s not a solution but every little bit helps as we try to transition to oil freedom.

  15. How did OPEC react to many millions of bpd of actual new production from Alaska, North Sea, etc. the last time around?

    Venezuela opened up the Orinoco to international oil companies. Investment flowed in to west Africa, Indonesia and other producers. The Asian currency crisis in the late 1990s led to factory shutdowns and a drop in demand for electricity in Asia. That put millions of barrels of excess oil capacity on the market, which got worked off by 2003.

    OPEC used to worry about a price band and keeping prices lower so as to not destroy demand and incentivize alternatives. It was the threat of an extra 2-3 million barrels per day of Saudi production that kept the other producers in line. The Saudis have not seen fit to increase productive capacity. If they won’t the US should.

    You will recall that the KSA asked IOCs to come in and make proposals on gas development in the Kingdom with the promise of oil at some future date. That was just 7 years ago.

    Drill the Mosquito Refuge!

  16. Here’s a quick question.

    Assuming say US put a million BPD onto the market.

    What is stopping Saudi Arabia from taking a million BPD off the market.

    And effectively eliminating any price benefit.


    Also as for much as you want to complain about the EIA’s pricing forcasts.

    Bottom line, we aren’t talking about a globally significant amount of oil.

    And frankly, we’re also talking about pennies worth of oil, in a time period where we likely see oil rise by dollars.

  17. greenengineer,

    Since I’m an exploration guy I’ll take a crack at these.

    You ask “1) Is the basic information (38 Gbbl existing offshore reserves) true?”

    Reserve estimates in unexplored or lightly explored basins are at best educated guesses. No one really knows what’s there until wells are drilled. If you gave 20 geologists all the data they wanted and gave them a year to study, you’d probably get a wide range of reserve estimates. Probably the most valuable information you could get from their studies would simply be, do the proposed areas look prospective, and if so, what is the upside potential?

    For context… The North Slope had been explored unsuccessfully for about 20 years by the US government after WW II. They then turned the job over to industry, which proceeded to drill 10 more dry holes. Then in 1968, the Prudhoe Bay Field was discovered. You can be sure that in 1967 no one in the government was happily assuming that about 20 billion barrels lay waiting to be tapped on the North Slope.

    Probably only the bravest souls predicted the outcome we know today for the North Sea…. and history is full of areas with high expectations that disappointed.

    “2) If so, why do they want access to additional offshore reserves?”

    Leases are different everywhere. Some are poor, some are good, some outstanding. If offshore areas are opened up to exploration, it’s almost certain that at least some of the offshore prospects acquired by industry would move their way up through the prospect ranking systems of various companies. You would end up with an improved inventory at the national level with greater potential for large discoveries than you had before.

    There is no secret quest for a landgrab – to strike while the iron is hot. It’s simply a matter of any company’s desire to expose itself to the best opportunities available.

    Finally, you should be aware that exploration leases are not held forever. They will always have performance clauses: 3-5 year terms if undrilled (10 in more difficult environments); rental payments for every year undrilled; and increasing royalty payments with time if undrilled. Besides not wanting to have large amounts of cash tied up in non-performing assets (offshore leases require a bonus bid, often in the tens of millions), the above factors incentivize firms to act quickly. No company wants to just sit on leases. If this is happening, you can be sure there’s a good reason for it.

  18. greyfalcon,

    “Assuming say US put a million BPD onto the market.

    What is stopping Saudi Arabia from taking a million BPD off the market.

    And effectively eliminating any price benefit.”

    Nothing is to stop them, assuming they don’t ask OPEC members to help shoulder the burden (that might be another story). But the world would now know that the Saudis have an extra million more bopd in spare capacity than they had before. So the price benefit wouldn’t be completely eliminated.

    “Bottom line, we aren’t talking about a globally significant amount of oil.”

    Probably not. But let’s suppose it’s a relatively modest 500,000 bopd (modest compared to the billions in reserves thrown around). Do you think there would be a price impact if the US announced tomorrow that it needed an extra 500,000 bopd?
    Ten years from now, that 500,000 bopd could be important.

    And 500,000 bopd keeps $26 billion per year in cash in the US at today’s prices. A Prudhoe scale discovery would mean $100 billion plus per year. We need to also consider the economic impact of that on the US economy in terms of trade balance, inflation, the dollar, interest rates, and jobs. It’s not only about oil price.

    Not that I strongly support offshore exploration (I favor it in general but accept that there are legitimate arguments against), but I think some of the arguments out there against it are not really relevant or correct.

  19. Grey – what armchair said.

    If the US added 1 million barrels per day and the Saudi’s took 1 million barrels per day out of production, market speculators would know that there is potentially 1 million barrels of excess capacity that COULD be pumped any time. Anyone betting long would have to take that into consideration. This would put us roughly back to the late 1980s and 1990s when prices were $10-20 per barrel.

    You could accomplish the same thing by wiping out a million barrels or so of demand – say by another asian currency crisis or economic recession in a developing country.

  20. Other invalid arguments I’ve seen that are used against offshore drilling:

    “There’s not enough equipment.”

    True in the short term. But it’s the industry’s job to see that it’s built. If outstanding new prospects are found offshore, industry will find a way to drill them, either by 1) building the necessary equipment from scratch, 2) finding a drilling partner who does have a rig, or, most likely, 3) reprioritizing their inventory to drill the most attractive prospects first.

    Imagine someone making this argument in 1930. “We can’t drill any more because we don’t have the equipment to find enough oil for 300 million people.”

    “We don’t have the refining capacity.”

    I have heard this seriously proposed, by the likes of the Center for American Progress. I have an idea. If we discover 2 million barrels per day, how about we import 2 million barrels less?

  21. Well armchair that does somewhat touch on one of the arguments I find a little bit disingenuous.

    There’s kind of the perception that if we buy less oil from the Saudis, then the Saudis will sell less oil.

    Because CLEARLY we are the only oil buyer in the world, right?

    And that since we are the ONLY buyer in the world, then that level of money won’t be shipped to organizations we don’t like. (i.e. Extreme islamic groups etc)


    You have every politician rambling down the line as if this were true.

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