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According to the NYT, the Energy Information Agency estimates that the total amount of oil in the offshore zone in question is about 16 billion barrels. If we assume that it would take about ten years from the day of authorization to get to peak production and that most of the oil is pumped out over 30 years, this would translate into a bit over 1 million barrels of oil a day.
That would be equal to about 1 percent of world production in a decade. If we assume a long-run demand elasticity of 0.3, this would imply a drop in world prices of approximately 3 percent. In today’s prices, we would be looking at a drop in the price of a barrel of oil from around $135 to $131. If this were passed on one to one in gas prices (this is long-run story), we might expect to see a drop in the price of a gallon of gas from around $4.00 to around $3.92 a gallon.
More from Ken Silverstein:
Ratio of military recruiters to college counselors at East Los Angeles’s Roosevelt High School:
The majority of young Swedish women are attracted to both men and women.
“My body was quite happy,” said ISS mission commander Chris Hadfield. “I learned to talk with a weightless tongue.”
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“This is the heart of the magic factory, the place where medicine is infused with the miracles of science, and I’ve come to see how it’s done.”