Critics of expanding domestic oil drilling into currently restricted areas such as the Arctic National Wildlife Refuge (ANWR) and the 85% of our territorial waters that are off-limits often dismiss the extra energy as a “drop in the bucket” — too small to ever make much difference in the global price of oil. But daily events strongly suggest otherwise.
It is remarkable how much the price of a barrel of crude changes from day to day. Moves of one or more dollars per barrel are common, even on relatively slow news days for oil. But in a tight market, small changes in supply or demand can mean significant moves in the market price.
Take the recent attack by Nigerian rebels on oil pipelines in that country, which caused the world price to spike by more than $1. At the very most, only 200,000 barrels per day were temporarily jeopardized. Or consider the evidence of a slight drop in U.S. demand that caused an equally significant price decline the day it was announced. In neither case did the supply/demand balance change very much, but the price move was notable.
Given the sensitivity of oil prices, it is very hard to imagine that the million barrels per day of additional oil that ANWR would provide when at full throttle, or the 2-3 millions more that could be had from other currently restricted offshore and onshore areas, would have a trivial impact on the price of oil.
