There's big news today in the oil market. British Petroleum made a huge find in the Gulf of Mexico. It estimates that the new pool beneath the ocean's surface could contain more than 3 billion barrels. That's a lot of oil. While this seems significant, I think the bigger news is the optimism that this might create for future oil exploration.
First, it should be noted that this oil well won't be producing too much oil for several years, as it takes a while to develop a new oil find. The best article I found on this story comes from Bloomberg, which says:
The latest discovery will help BP, already the biggest producer in the Gulf of Mexico, boost output in the region by 50 percent to 600,000 barrels of oil equivalent a day after 2020.
Let's put these numbers into perspective. Oil-rich Saudi Arabia imports in the ballpark of one million barrels per day to the U.S. alone. And that is only a fraction of the around 12 million barrels per day that the U.S. imports. So while this find shouldn't be scoffed at, it isn't exactly a game changer in the global oil market. I doubt it will result in Americans seeing significantly lower prices at the pump, though it could help to slow the inevitable rise of gas prices.
I think the bigger news is that this reinforces the idea that firms are still finding new oil. The Bloomberg piece additionally notes a recent oil find in the Tupi field in Brazil, which might hold 8 billion barrels. BP's success also might lead to it and other oil companies investing more heavily in the Gulf and other off-shore projects.
Renewable energy advocates are heavily reliant on the argument that oil wells are drying up. I think that argument is ultimately hard to refute. But if the possibility of an oil shortage seems dimmer than some thought, since significant new sources are being found, then that may damage the perception of the urgency for alternative sources of energy.