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Offshore Drilling: An Alternative to Funding Terrorism

University of Missouri-Kansas City Federalist Society
Kansas City, MO
October 29, 2008
Becky Norton Dunlop

University of Kansas Federalist Society
Lawrence, Kansas
October 30, 2008
Becky Norton Dunlop

Thank you so much for the opportunity to come and speak on this timely subject.

If you were to listen to what the mass media has to say, you may come to believe the Conservatives are unconcerned with the environment. The mainstream media may lead you to believe that Conservatives don’t care about clean beaches, run-off in streams, and contamination; that they are at odds with the environment. The truth of the matter is that what Conservatives are often at odds with is the type of policy that is pursed in the United States. The problem is that current policy is out of touch with fundamental Conservative principles.

The trend in recent times with environmental policy has been towards bigger government. Policies such as the Endangered Species Act and the Clean Water Act have made issues that affect communities, and often lone individuals, federal problems. These policies have also violated free market principles and private property rights, both of which conservatives hold dear.

Offshore drilling marks the cross roads of the current American energy crisis and environmental concerns because of the possibility of oil spills and other potential dangers involved in drilling. From the environmental extremist point of view, one will hear individuals like Athan Manuel of the Sierra Club say that, “There is just not enough oil and gas left in the United States to make ourselves energy-independent…it makes sense for us as a nation to move away from fossil fuels altogether.” This is emphatically not true – not based in science and ridiculous.

Then the passage of H.R.6899, the Comprehensive American Energy Security and Consumer Protection Act, in the House occurred back in September which was heralded as a victory by Nancy Pelosi. It was advertised to enhance national security by reducing our independence on foreign oil. H.R.6899 however was the, “drilling bill that doesn’t allow drilling,” if you will. You have to ask yourself why a woman who was adamantly opposed to offshore drilling just last month, quoted as saying, “I’m trying to save the planet! I’m trying to save the planet!” was suddenly championing a bill allowing drilling only to turn around and ridicule the President on the issue following the expiration of the drilling moratorium? Here was the twist. At the moment, the federal government owns coastal waters 3 miles and beyond to 200. Jeff Jacoby of the Boston Globe reporting on H.R.6899 says, “This bill permanently bans all drilling within 50 miles of the U.S. coast, which just happens to be where most of the recoverable oil and gas reserves are. It permits drilling between 50 and 100 miles out only if the adjoining states agree – which they won’t, since the bill denies them any share in the royalties the oil companies would have to pay, thereby eliminating any financial incentive for a state to say yes.”

Pelosi moved the bill because it answered the call of Democrats’ constituents demanding drilling, while at the same time the waters where the majority of oil can be found. The bill would have expanded the availability of oil by at least 2 billion barrels. The science of the matter reported by the Bureau of Land Management’s inventory of oil and natural gas deposits on federal lands estimates onshore holdings of 187 trillion cubic feet of natural gas and 21 billion barrels of oil. More to the point, a federal study reports that 83 trillion cubic feet of natural gas and 19.1 billion barrels of oil lie beneath federally-controlled territorial waters. However, federal estimates are usually low, and the real inventory likely much larger. The oil available in territorial waters alone is equal to 30 years of current imports from Saudi Arabia. This isn’t even to mention ANWR or oil shale inventory, which all totaled could provide the equivalent of over 200 years of current imports from Saudi Arabia.

Under the plans the Democrats are proposing we would have left 17 billion barrels of oil on the table. Eventually someone would get to this oil via horizontal drilling techniques or other future advancements. So why the debate? Why are we risking leaving this abundant natural resource to others who will come in and take it out from underneath us? Most likely this is because liberals do not mind the high gas prices. High gas prices make the promotion of alternative energies and the reduction of fossil fuels, which environmental extremists blame for global warming an easier sell. In their eyes, drilling, unquestionably, will damage the planet. The reality is that U.S. oil companies have some of the most environmentally sensitive equipment on the planet, equipment that withstood two Class 5 hurricanes in Katrina and Rita. Now who do you think is going to care more about oil leaks on our beaches and pollution to the United States? U.S. oil companies or the Chinese and other countries already buying plots off the northern coast of Cuba and within 50 miles of our shores?

Conservatives believe that policy and politics work best at the local level. We believe that individuals know what is best for them and they should be allowed to pursue their interest with limited constraints from the government. In the realm of environmental policy, conservatives believe that individuals, local communities and states are best equipped to handle the environmental issues that affect them. Conservatives believe that big government and environmental stewardship are not one-in-the same. People in the coastal regions of our country, where offshore drilling is now a hot topic should make the decision whether to progress forward based on sound scientific argument with the most up to date data on potential oil reserves and the technology to remove it. It should not be the decision of those in other states miles away, and especially not those in Washington, D.C.

What this issue comes down to is Constitutional federalism. It needs to be accepted that the states can responsibly control and maintain their own waters instead of being micromanaged from above. Increasing energy supply is a necessary step that the United States must take to be ensured of continued and new economic growth. It is ridiculous to think that with America’s current mobile workforce infrastructure we can simply turn off all the gas pumps overnight and wake up the next morning on a renewable energy source. We are working on renewable energy. And certainly even more needs to be done. But in the interim, that transition can be made easier with the production of our own fuels to ease the burden on the average American at the pump. In addition, producing more of our own energy means that we will not have to depend on imports from country’s that do not have our interests in mind. It is a very serious matter the possibility that taxpayers and consumers are putting dollars into the hands of those who support terrorism and seek to undermine the United States. These include of course, Saudi Arabia and Venezuela. Becoming a nation in which America can be much more self reliant for its energy needs prevents the potential funding of those who wish to destroy us. We can and should have trading relationships for energy with other nations but they should be ones we deem to be friends and allies in the quest for greater human liberty.

When I worked with Governor George Allen in Virginia we realized early with the EPA that a one-size-fits-all blanket policy does not work. How could it? When you look over the landscape of our nation, it should be apparent that what works for the beaches of Florida is most likely not going to be appropriate for the Black Hills of South Dakota. The states should decide what policies best work for their citizens and their environment.

Under the policy I advocate, states would have option of choosing how to deal with their Outer Continental Shelf lands, and the benefits of permitting drilling would go to the states. In a state like Florida, where there are objections to energy development, there would be the option of not drilling but I would argue that by delegating these decisions to the local level, Florida’s citizens would have more of a voice in how the drilling was conducted and how the revenues would be spent. By letting the state decide how to go about developing OCS, citizens can hold their elected legislators accountable. If Floridians disapprove of how a legislator stands on OCS development, they can vote him out in the next election. Or conversely, if the drilling produces more revenue it can be used for something like the Everglades Restoration of improving the stewardship of other state resources, or even reducing the tax burden on Floridians. Santa Barbara County in California recently reversed their stand on offshore drilling and passed resolution supporting more drilling. Even with the federal moratoria lifted on Oct 1st, current Washington policy dictates that a federal regulator knows better.

More importantly is the matter of revenue. Currently, the federal government receives the revenue derived from OCS energy production. Bills like H.R.6899 would continue this trend. In addition, it would strip the oil companies of $18 billion in tax breaks leaving both the states and oil companies with little incentive to allow or explore drilling, respectively.

I purpose that the federal government would no longer receive a cut of the money until the resources were developed and then its “cut” would come in the form of tax revenue generated by increased economic activity. The simple fact would be that if OCS has been removed from federal jurisdiction, each state would receive 80 percent of the revenues generated from production off its shore. It would share the remaining 20 percent with other states.

Obviously, a revenue-sharing structure of this sort would find critics in the federal government, which would lose roughly $5 billion each year. Many big government environmentalists would object because the federal government uses some of these funds for environmental purposes, like the Land and Water Conservation Fund and the National Historic Preservation Fund. Without OCS revenues, they would argue, these programs would lose important income.

My response to these critics would be that I would rather have these revenues in the hands of the states and not the federal government. When the states control the money, they would be free to use it for the purposes they see fit. In many cases, this money could be used to fund environmental initiatives that are made to fit the specific needs of the states as determined by their governors and state legislatures. And, if citizens are not pleased with the way these revenues are being spent, they can simply elect new officials. It’s a much better system than when the policy is centered in Washington, D.C. with bureaucrats who neither knew nor frankly care what states, localities and citizens want or need.

Current OCS policy is dictated by Washington and is a complex maze of bureaucratic regulations even without the moratorium. In the case of OCS, a simple policy is the best policy. The federal government should cede its authority to the states.

Let’s allow the states to decide what to do with their lands.

Let’s stop the micromanagement, and understand that those at the state level will without a shadow of a doubt responsibly take care of their environment, their home.

Let states use new tax revenues from drilling to reduce taxes on entrepreneurs, so they can fund and develop all matter of energy sources and infrastructure and increase the invention of new and better technologies.

Let’s take the opportunity to lower current fuel costs to bridge the gap.

Let’s finally increase development of our resources – grow our economy and trade with allies of human liberty rather than funding those that support terrorism and deny freedom to their own people.