To drill or not to drill

By Ron Beasley

It is being reported that Obama is reconsidering his opposition to off shore drilling. 

ST. PETERSBURG — U.S. Sen. Barack Obama said today he would be willing to open Florida's coast for more oil drilling if it meant winning approval for broad energy changes.

"My interest is in making sure we've got the kind of comprehensive energy policy that can bring down gas prices," Obama said in an interview with The Palm Beach Post.

"If, in order to get that passed, we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage - I don't want to be so rigid that we can't get something done," Obama said.

Now this has the no drilling folks up in arms and the drill now folks gloating, including my normally rational friend Jazz over at the Moderate Voice.  Now off shore drilling will not lower the price of gasoline now or ever.  It's all propaganda.  The only thing it will do is further inflate the bloated bottom lines of the oil giants.  Now I think this may have been a good move on Obama's part to take the wind out of the sails of McCain and the rest of the oil company stooges.  What Obama is proposing is not going to happen before the election.  With a Democrat in the White House and the Democrats in control of both houses the possibility exists to negotiate good leases that benefit everyone not just the oil companies.  The cabal currently in charge would just give it away to their friends and supporters in big oil.

Do you really want to lower oil prices.  Robert Naiman writing at the Huffington Post has a way.  Quit letting the Knesset and AIPAC drive US foreign policy and lift the sanctions on Iran.

Sanctions are pushing up the cost of oil," notes Juan Cole in a recent piece on Salon.
I asked Cole what his estimate of the scale of this effect was. If Iran could have expanded production of oil from 4 million barrels a day in the late 1990s to 6 million barrels a day today, that would be an extra 2 million barrels a day, i.e. 88 million barrels a day globally instead of 86, Cole says.

I asked Dean Baker of CEPR what could be the impact of lifting sanctions on Iran, and he wrote:

"Suppose they open up to foreign investment and production goes up 1-2 million barrels a day after a few years...It's 5 to 10 times McCain's offshore drilling."

So, summarizing in a table, using MOD ["McCain's Offshore Drilling"] as our "numeraire," as the economists say, we have the following:

Modest Conservation: 16 MOD
Lift Sanctions on Iran: 5-10 MOD
McCain's Offshore Drilling: 1 MOD

Now, some would surely argue that simply lifting sanctions on Iran is not politically feasible, because there is currently a "Washington Consensus" for sanctions on Iran supported by groups like AIPAC, linked to its nuclear program, relations with Iraq, Hamas, Hizbollah, etc.

Let's concede for the sake of discussion that that is true. What about the lifting of sanctions in the context of a real, negotiated deal with Iran? Would such a deal be more likely if Americans realized that the likely effect of such a deal would include an increase in world oil production roughly equivalent to 5-10 MODs?