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Foreign Oil, or Domestic Oil? Foreign Oil, or Domestic Oil?

Foreign Oil, or Domestic Oil?

by Reno Ong
May 26, 2010

A recent Grist article discusses the issue of offshore drilling as a byproduct of U.S. aspirations for energy independence. Since oil reserves in the continental United States are growing scant, offshore drilling advocates contend that offshore expansion is necessary to attain this goal. However, aside from the environmental hazards posed by offshore operations (as demonstrated by the recent Deepwater Horizon incident), domestic production also bears a high financial cost:
Given the easily accessible geology and the still-plentiful supplies, Saudi oil clocks in at just four to six dollars per barrel, with similar costs for other sources of Middle Eastern oil like Iran and Iraq. With relatively mature fields, Venezuelan oil costs about $20. ??But it still beats out oil from the Gulf of Mexico and other offshore areas of the United States, which cost a comparatively whopping $32 to $65 dollars per barrel to produce, according to the IEA. Even when you throw in transportation costs of about two dollars a barrel to get oil from the Persian Gulf to the United States, Saudi oil is still just a quarter of the cost of offshore U.S. oil.
So foreign oil is cheaper, and more environmentally-friendly (a lesser evil of sorts, when it comes to oil energy). Of course, things aren't so simple. After all, the American pursuit of energy independence is also an effort to make the nation more independent politically, by removing the leverage held by large oil-producing countries. It is therefore a matter of whether Uncle Sam is willing to forego political aspirations for a different cause.

Read more at Grist.

Photo (cc) by Flickr user NatalieMaynor
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