Economic feasibility. The cost of exploiting alternative resources increases as they become more challenging (essentially from the top to the bottom of Table 7.6). Oil prices are set in a world market, even though the world price may be influenced by the actions of major producers, and historically, oil prices have been quite volatile. Such volatility can be a disincentive to the large and long-term investments needed to find and produce oil from technically challenging and increasingly costly resources.
Access to resources. The resources listed in Table 7.6 include quantities of oil estimated to occur in the coastal plain of the Arctic National Wildlife Refuge (ANWR-1002 area), which is currently off limits to exploration and production, and parts of the outer continental shelf (OCS), for which policies on access for exploration and production are currently in flux (see “The Access Issue” subsection that follows for additional discussion).
Although predicting the level of domestic production that results from the confluence of these factors could be considered speculative, the EIA has estimated how oil production might be affected by changes in them. Table 7.7 summarizes the agency’s most recent figures for several alternatives.8
Notwithstanding the considerable uncertainties involved in these estimates, it seems clear that the level of net domestic oil production is relatively insensitive to favorable developments in technology, higher world prices, and access to new resources. This is not to say that these factors are unimportant. Rather, it seems appropriate to conclude that because of the decline in currently (and future) producing oil fields, maintaining domestic production at something like current levels is a very challenging assignment. As a result, reducing consumption is likely to be the most important factor in decreasing domestic dependence on oil as an energy source.
Considerable caution should be used in interpreting Table 7.7. For one thing, the cases are not additive. In some instances, they involve arbitrary changes to parameters in the reference case, and assumptions about physical properties are not explicit. The high-oil-price case is not built up from a cumulative supply curve in the EIA estimating procedure and thus should not be thought of as representing actual economics. Other sources offer different projections, but because the EIA reference case appears to lie near the middle of the range it is useful for comparison purposes. See the National Petroleum Council Data Warehouse (available on CD with the NPC report Hard Truths [NPC, 2007]) for a collection of forecasts from a variety of sources.