November 2010 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate crude oil jumped by $2.24 (2.7 percent) in November, to $84.14 per barrel. That price increase occurred despite a slightly stronger dollar, a similarly modest drop in consumption of 185,000 barrels per day (BPD) -- to just over 19.5 million BPD -- during September, and an uptick in crude stocks.
 

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On December 1, the Obama administration officially reversed its March proposal to open portions of the Atlantic and Pacific coastlines, and the eastern Gulf of Mexico to oil exploration. Instead, the administration said it will not propose such exploration for at least seven years. “The changes that we are making today really are based on the lessons that we have been learning” since the April 20 explosion that killed 11 workers on the Deepwater Horizon rig, Interior Secretary Ken Salazar said in a teleconference with reporters about the decision. The Interior Department’s 2012-2017 offshore drilling lease strategy will proceed “safely and responsibly” with offshore drilling “in the right ways and the right places,” he added.

Salazar also announced that the next lease sales in the western and central Gulf of Mexico -- where drilling is currently allowed under law -- will occur in late 2011 and 2012 after the department finishes its environmental review. He also emphasized that only an estimated one third of leases available to drilling companies in the Gulf are currently being used by those companies.

Interior’s announcement quickly won praise from some anti-drilling advocates. “The White House obviously learned lessons from the BP oil disaster," Rep. Kathy Castor (D-Fla.) said in a statement. "Drilling for oil off of Florida’s coast poses a threat to Florida’s economy, jobs and environment. Our small businesses and hotel owners are still suffering from the devastation left behind by the BP blowout."

However, Rep. Doc Hastings (R-Wash.) -- who is expected to chair the House Natural Resources Committee next Congress -- said the decision is “short-sighted and will lead to long-term job impacts, economic harm and increased reliance on foreign energy from dangerous and hostile countries.” The solution, he said, “is to find out what went wrong and make effective, timely reforms to ensure that U.S. offshore drilling is the safest in the world.”

One energy industry official said the reversal is not terribly surprising given that the West Coast was never in play and the eastern Gulf and Atlantic coastline were barely so. “This is just playing base politics,” the industry official said. “They’re just taking care of their ‘enviro’ base.”