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PolitiFact: Sarah Palin's $8 billion figure for cost of lost oil production is way, way off

The statement

"We're going to be looking at $8 billion a day that we're going to be pouring into foreign countries in order to import that make-up fuel that we're going to need to take the place of what we could have gotten out of the gulf."

Sarah Palin, in an interview on Fox News

The ruling

In an exclusive interview with Fox News' Greta Van Susteren, former Alaska Gov. Sarah Palin, on her "One Nation" bus tour, said there will be a steep price to pay for President Barack Obama's decision to place a temporary moratorium on new drilling in the Gulf of Mexico in the wake of the April 2010 Deepwater Horizon oil spill.

We're not sure exactly how Palin came up with her $8 billion a day figure. Palin's political action campaign did not respond to our inquiry about the figure she used. But some simple math shows she is way off.

According to the latest projections (May 2011) by the EIA, the government agency that keeps track of energy statistics, imported oil is expected to cost $104.58 per barrel in 2011 and $108.12 per barrel in 2012.

Let's assume demand stays constant and that any drop in domestic production is met with an equal, additional purchase of imported oil. So a drop in oil production of 130,000 barrels a day in the Gulf of Mexico in 2011 would mean the purchase of an additional 130,000 gallons a day from imports. That comes to $13.6 million a day.

But that's just 2011. The total projected drop in oil production in the gulf between 2010 and 2012 is 320,000 barrels per day. At projected 2012 prices ($108.12 per barrel), that comes to $34.6 million a day. So Palin's number of $8 billion a day is way, way off.

One other EIA statistic adds further perspective. According to the EIA's Annual Energy Outlook report (Table A11.) issued on April 26, the "net import share of liquid fuels" (the percentage of fuel we get from imports) is expected to steadily decline over the next 25 years; from 52 percent in 2009; to 49 percent in 2015; and eventually down to 42 percent in 2035. In other words, the EIA — in a report prepared after the moratorium — projected that our reliance on imported oil is expected to decrease over the long haul.

Palin is correct that the moratorium caused a dip in Gulf of Mexico oil production. But by the most generous accounting, the cost of that dip in oil production and the substitution of imports comes to a little less than $35 million a day. Palin said $8 billion a day. That's way off. We rate her claim Pants on Fire.

This ruling has been edited for print. For the full version — and to read other rulings — go to PolitiFact.com.

PolitiFact: Sarah Palin's $8 billion figure for cost of lost oil production is way, way off 06/06/11 [Last modified: Monday, June 6, 2011 8:59pm]
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