Calling Dr. Rorschach… Dr. Rorschach needed in the energy wing… The International Energy Agency hath spoken; now the US Department of Energy has reported. It’s a Rorschach: the Drill-Spill Cult will see things to prop up their agenda, up until the actual numbers. You know, math: the stuff that turns an opinion into analysis. And the math says “more of the same.”
The drill-hypnotized claim that more drilling means lower prices at the pump. This, despite the fact that US oil production peaked in 1971. Secondary and tertiary recovery (extraction from difficult fields, the “leftovers” of old wells, natural-gas liquids, etc.) may get it 1971-like in the near future. Except prices won’t go anywhere near 1971: Secondary/tertiary extraction is difficult and costly, while more and more drivers (both US and overseas) now drive more cars. The cold, hard numbers: the DoE predicts the price of an oil barrel will go from US$112 to… $92. Gasp!
Notice that’s the price per barrel of crude oil- not a gallon of actual gasoline that can run an engine. Because gasoline is a heavily-refined product, only a fraction of the pump price is crude stock. Difficult extraction mainly benefits airlines, as jet fuel is a simpler refinery task. Depending on the stock, ships and old homes may benefit, as bunker oil and home heating oil are also easy to refine from crude. Oh, and the oil companies will certainly benefit, since they will traffic in higher volumes but at nearly the same price.
All told, I see the pump price of gasoline falling by nickels and dimes due to such measures. The cost of crude does not affect our constrained pipeline infrastructure, nor our tightly-constrained refining industry, nor distribution (more constrained pipelines) and retail (decreasing competition among filling stations.) Numbers, then? Take that literally: two nickels and two dimes equals thirty cents. The price of gasoline will not fall to 1971 levels, nor 1981 levels, nor 1990. That was when a barrel of crude was below $30, and often a lot below.
Meanwhile, efficient vehicles don’t gain a few percent- they can improve fuel economy by a few times. Plain ol’ hybrids increased MPG by nearly twice, with strong hybridization (“stealth mode”). Plug-in hybrids gain effective MPG over that: both Volt and Prius Plug-In owners with suitable driving cycles report final MPGs approaching double the non-plug-ins. Pure-electrics report “equivalent MPGs“, for what that’s worth, of around a hundred and sometimes more. While direct injection has benefitted conventional piston engines, there’s nothing keeping direct injection out of hybrid vehicles. In fact, strong hybrids allow three- and two-cylinder piston engines, which are easier to direct-inject.
We are at the cusp of disruption: not a few more MPG, but a whole new way to look at gas pumps. More of the old thinking will get you just that: old thoughts. And this isn’t even including the rise in denser neighborhoods, and decreasing auto dependency.