Offshore Drilling Won't Help, But "Green Stimulus" Can
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"Gas prices -- $4, $5, no end in sight, because some in Washington are still saying no to drilling in America," says the narrator in the TV ad that Republican presidential candidate John McCain played last week.
"Who can you thank for rising prices at the pump?"
Cut to crowd, chanting: "Obama, Obama."
Yes, this is a real political ad on TV, complete with "I'm John McCain and I approve this message." It is not The Onion .
Reality check: First, Senator McCain's proposal to "drill more in America and rescue our family budgets" -- that is, to open up environmentally sensitive offshore areas to oil drilling -- would take about a decade to produce any oil. That's according to the Energy Information Administration (EIA) of the U.S. Department of Energy.
Maybe by "family budgets" McCain meant rescuing families in 2018. Or maybe not. According to the EIA, the total amount of oil that this drilling would produce at peak 20 years from now would be less than 0.2 percent of world production. This would be too small to have any significant effect on the price of oil or gasoline, according to the EIA.
Last Sunday, on the ABC morning talk show "This Week," Senator McCain again mentioned "offshore drilling" as part of a plan to reduce dependence on foreign oil. He got away with it, since the host didn't ask him how such a tiny amount of oil would have any significant effect on imports. He included a number of other things, too, but did not mention mileage standards for cars, mass transit, or conservation generally.
Fuel efficiency standards for passenger vehicles in the United States have barely changed since 1985. If we had chosen to raise these standards (for cars and light trucks) by less than one half mile (0.4 miles) per year, the average car on the road would be getting 32 miles per gallon. This would reduce our oil consumption by 3.3 million barrels per day, or more than 16 times what McCain's offshore drilling would get us twenty years from now.
Mass transit could also be greatly expanded, as today's gasoline prices have made people more than ready to use it. This would not only save a lot more oil imports than offshore drilling, it would also provide jobs and an economic stimulus at a time when it is badly needed. The U.S. economic downturn is just beginning: we built up an $8 trillion housing bubble during the decade from 1996-2006, and only about 60 percent of it has burst so far. At the current rate of house price declines, another $2 trillion in housing wealth will disappear this year. Consumer spending, which is 70 percent of the economy, is likely to decline and the labor market will continue to weaken. The prior stimulus package passed in February has given some boost to the economy for the first half of this year, but much more will be needed.
A "green stimulus" package would give the economy a lift while simultaneously reducing energy consumption. This would include not only mass transit but also tax credits for homeowners and businesses to make building improvements that conserve energy. These would include renovations such as solar panels and insulation. Sizeable tax credits in this area would also help the ailing construction industry, an important part of our economy that has collapsed with the housing bubble.
All of these measures make a lot more sense than drilling for very little oil in environmentally sensitive areas, while trying to blame Barack Obama for rising gasoline prices.
Mark Weisbrot is Co-Director and co-founder of the Center for Economic and Policy Research . He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy .