Oil: How short is the short run?

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To avoid haggling with “unstable regions and unfriendly regimes,” U.S. President George W. Bush recently called for an expansion in domestic oil production to fill the United States’ “short run” oil needs. Part of that call involves exploring new areas of supply, such as the Outer Continental Shelf (sections of U.S. coastline) and parts of ANWR (the Arctic National Wildlife Refuge).

But how quickly can we actually pump out the needed “short run” supply from these places? It can take from three to 10 years from the time the decision is made to explore to actual oil delivery, according to OPEC.

Of course, the time required to produce oil depends on where the oil is and how difficult it is to reach. For instance, drilling in deep water, like in the Gulf of Mexico, can take longer for technical and financial reasons. U.S. companies will likely incur some added expense in trying to reach the undersea oil — there is a global shortage of deepwater drilling ships equipped to do the job, and each one costs a pretty penny (i.e. several hundred millions of dollars) to construct.

According to OPEC, oil exploration alone, which involves surface-mapping and test drilling, costs “tens or hundreds of billions of dollars.” Hundreds of billions of dollars better spent on developing new energy technologies, perhaps?

And what about the controversial ANWR drilling? That’ll take about 10 years to bear fruit, two or three of which will be spent just collecting necessary leases and paperwork. Even if that timeline holds and the wells start producing a decade from now, peak production isn’t expected until the 2020s. At which point, with any luck, the United States will have started to wean itself off its most enduring addiction.