FOR IMMEDIATE RELEASE
April 10, 2008
CONTACT: Public Employees for Environmental Responsibility (PEER)
Carol Goldberg (202) 265-7337
US Offshore Leasing Premised on Future of Cheap Oil
Planning Assumes $30 a Barrel Oil to Minimize Potential Environmental Impacts
WASHINGTON, DC – April 10 – With prices surging past $112 for a barrel of oil, the federal government is basing its Arctic offshore drilling plans on the assumption that oil will cost only $30 a barrel and not rise beyond $46 a barrel by 2012, according to agency records posted today by Public Employees for Environmental Responsibility (PEER). These vast underestimates were based on old forecasts which the Bush administration refused to update for fear of slowing leases sales in the Arctic Outer Continental Shelf.
Planning documents from the Minerals Management Service (MMS) of the U.S. Interior Department for current and planned leases assume that –
* The long term price of oil will range from $18 to $30 a barrel during the life of Beaufort Sea leases offered for sale in 2007; and
* In its forecast for the years 2007-2012, MMS states that $46 per barrel represents “a reasonable estimate of the long-term process the oil and gas industry will be using for making its development decisions.”
“No wonder President Bush is surprised that gasoline is reaching $4 a gallon since his administration is officially oblivious about the market price of oil,” stated PEER Executive Director Jeff Ruch. “Cheap oil is never coming back, no matter how much we drill.”
By deliberately understating the price of oil, MMS claims that it would not be economically feasible to require oil companies to conduct extensive mitigation of adverse impacts from exploration. Moreover, the false assumption of low oil prices is used to argue that offshore lease sales will have minimal adverse environmental effects because –
* The chances of oil spills would be diminished because the price would be too low to justify extensive investment or production; and
* Oil firms would not have an economic incentive to penetrate pristine areas vital to wildlife;
Not surprisingly, MMS found that these Arctic lease sales would have no significant environmental impact. Native groups and conservation groups are suing to invalidate the lease sales and are citing these unreasonable price forecasts as one basis for performing new, unbiased evaluations.
“These phony forecasts are meant to short-circuit honest analyses of what the effects will be,” Ruch added. “Staff scientists are under orders to go along with these and other unrealistic assumptions because Headquarters wants these Arctic lease sales issued now, come hell or high water.”