Last July, President Bush responded to public anger over $4.00 a
gallon gasoline and rescinded the longstanding executive moratorium
on offshore leasing for oil and natural gas. Congress followed suit
by allowing its own restrictions to lapse on October 1. But now,
the Obama Administration has taken steps to slow down the process
of leasing these areas to energy companies, and some fear that
expanded offshore drilling will be put off indefinitely. Delay
would be a mistake and should be kept to a minimum, as additional
domestic oil is still badly needed.
Background
For many years, 85 percent of America's territorial
waters--including most of the Pacific, Atlantic, and eastern Gulf
of Mexico--were off limits to oil and natural gas exploration and
drilling.[1] The U.S. is the only nation that has
restricted its own energy supply to this extent. An estimated 19
billion barrels of oil--nearly 30 years of current imports from
Saudi Arabia--as well as substantial natural gas reserves are
estimated to lie beneath these restricted areas.[2] And it should be
noted that these initial estimates in under-explored areas tend to
be on the low side.
Most of these restrictions were put in place at the behest of
environmentalists and other drilling opponents in the late 1980s
and 1990s, a time when gasoline was cheap and the need for
additional supplies was not seen as great. But they have remained
in place in recent years, even as gasoline hit $2.00 and then $3.00
a gallon and state-of-the-art drilling technology has amassed a
proven record of reducing the environmental impacts and risk of
spills.[3]
However, when prices hit $4.00 a gallon last summer, a fed-up
public clamored for action, and polls showed more than 2-1 support
for offshore drilling. President Bush and Congress finally listened
and belatedly removed the legal restrictions governing drilling in
new offshore areas.
Delay, Baby, Delay
The next step in the process is for the Department of the
Interior's Minerals Management Service (MMS) to offer these areas
for lease. MMS took the first step in this process when it
published its 2010-2015 Draft Proposed Program on January 21. It
included a 60-day period for comments. Signaling this deadline
might be postponed indefinitely, President Obama's new secretary of
the interior, Ken Salazar, announced that he is extending the
comment period by six months and ordered the agency to gather
additional information on the estimated amounts of oil and natural
gas in these offshore areas.[4]
By itself, a six-month delay is not unreasonable, but Secretary
Salazar's comments when announcing the change suggest that he may
try to drag out the offshore leasing process much longer than that,
and perhaps for the length of his tenure. First, he
mischaracterized the initial proposal, which MMS formulated prior
to Obama taking office, as "a headlong rush of the worst kind." In
reality, the announced 60-day comment period, far from being a
point of no return, was merely the first of several steps in the
energy leasing process. This process already contains several
opportunities for environmentalists, coastal state governments, or
others to weigh in with any objections or concerns. Wanting
additional time for this first step suggests that Salazar may be
launching a strategy of paralysis by analysis.
Further, Salazar has downplayed the benefits of additional oil,
attacking the original proposal as a "drill-only approach" that
excluded offshore renewable energy sources like wind and wave
power. "The Bush Administration was so intent on opening new areas
for oil and gas offshore that it torpedoed offshore renewable
energy efforts," he said. These statements, in addition to being
untrue (the same day the Bush Administration announced the proposed
plan for oil and gas leasing, it also announced a proposal moving
ahead with a major offshore wind energy project), also make no
sense from an energy policy standpoint. These offshore renewable
projects at issue are for electricity (and very expensive
electricity at that) and thus would do nothing to help America meet
its growing need for liquid fuels for its citizen's cars and
trucks. Any Administration attempts to obfuscate the need for more
offshore oil with diversions about these politically correct
renewables will not do the American driving public one bit of
good.
"Drill Now" Still a Good Idea
The days of $4.00 a gallon gas are gone for now, and with them
the front-burner status of "drill, baby drill." Nonetheless, this
is no time for complacency. The only reason for the sharp drop in
oil and pump prices is a decline in demand due to the recession.
But recessions do not last forever. Unless America begins to take
action to increase supplies, prices will go right back up as soon
as the economy turns around and demand picks up. Further, the
process by which energy companies obtain a lease, explore for oil
and gas, and then produce it takes a number of years to unfold, so
the time to start things is now.
Expanded offshore drilling would also create jobs,[5] and
unlike the taxpayer-funded jobs in the proposed stimulus package,
the jobs created by a reinvigorated domestic energy industry would
be well-paying, long-term, and funded entirely by the private
sector. And since the extra energy produced would help bring down
future oil and natural gas prices, it would truly be a win-win for
both producers and consumers.
Don't Turn Back
Though this proposal was crafted by the outgoing Bush
Administration, the Obama Administration would do well to continue
with it. It sets out a sensible plan for moving expeditiously but
not recklessly toward leasing new areas. The offshore oil and
natural gas leasing process should not be delayed beyond the six
months announced. The American people would be best served if this
process leads expeditiously toward substantially expanded domestic
offshore energy production in the years ahead.
Ben
Lieberman is Senior Policy Analyst in Energy and the
Environment in the Thomas A. Roe Institute for Economic Policy
Studies at The Heritage Foundation.