Skip to main content

Maybe it's a gesture to the American right, which is still seething over the recent passage of Barack Obama's national heath care package in Congress. Or maybe it's just soma for increasingly anxious American motorists, so they can sleep at night without wondering how long their petroleum-based lifestyles can possibly last.

But either way, President Barack Obama's sudden reversal of the ban on new oil and gas drilling in protected U.S. waters is nothing more than a public relations exercise that will still leave Americans facing the daunting reality that they must learn to consume less, not more, of the one substance they have grown so overwhelmingly dependent on.

There are no Spindletops waiting to be found anymore, neither in the mid-Atlantic nor in the Gulf of Mexico. There aren't even Prudhoe Bays or North Seas-just ridiculously expensive stuff found miles below the ocean's floor, like the recently discovered Tiber field. By the time any oil flows from these newly opened offshore areas, the American economy will have abandoned oil as a transport fuel-a change that will be dictated by a series of oil-induced recessions like the one we've just exited.

Story continues below advertisement

But that won't stop America from drilling. Probably nothing much will; certainly not the oil industry's recent track record. It was only a few years ago that the "drill, baby, drill" movement viewed the Gulf of Mexico as the promised land of oil self-sufficiency. Back in 2004, the same Department of the Interior that now claims they've opened up billions of barrels of oil for industry development was confidently forecasting that U.S. oil production from offshore fields in the Gulf of Mexico would quadruple by 2020 to as much as four million barrels per day.

The energy bureaucrats in Washington, along with the oil industry, ridiculed suggestions that America was running out of oil, pointing to the vast treasure chest of oil reserves that lay trapped under the seabed of the Gulf of Mexico. New deep-water platforms, like BP's Thunderhorse, adorned the cover of BusinessWeek, heralding a new age of advanced deep-water drilling technology, which would tap previously unrecoverable or even unknown oil resources.

But despite all the billions spent on offshore development then, U.S. oil production in the Gulf of Mexico has not grown in the half-decade since Hurricane Katrina left her mark. In fact, production in the region has only recently climbed back to its pre-Katrina mark of roughly 1.6 million barrels per day.

And that was with the benefit of a below-normal hurricane season last year. Throw in another bad storm season, along with the rapid-fire depletion rates that normally dog offshore fields, and oil production in the Gulf of Mexico will soon be heading backwards again.

So baby, you can drill all you want, but what you'll find won't keep you on the road.

Report an error
About the Author
Jeff Rubin

In his follow-up to his award-winning and number one best-selling first book Why Your World  Is About To Get A Whole Lot Smaller, former CIBC World Markets chief economist Jeff Rubin asks a fundamental question: “What will it be like to live in a world without growth?”The end of cheap oil means the end of the easy answers to renewing prosperity. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.