Offshore Oil Drilling Will Still Not Lower Gasoline Prices: Barack Obama and Legislative Compromise
Barack Obama photo by Michael S.
A few weeks ago I wrote about a TV ad which the McCain campaign was running which, in short, said that 1) drilling for oil in offshore areas which are currently off limits is the solution to reducing high gasoline costs in the United States, and 2) that Barack Obama is the sole reason these areas are off limits. At the time Obama had stated opposition to drilling in these areas, though to insinuate that the Illinois senator was even remotely personal responsible for bans on offshore is entirely ludicrous, even if he
isn't wasn't a supporter of such action.
Obama Willing to Compromise on Offshore Oil Drilling
At the end of last week, Barack Obama changed his position on offshore drilling. From :: Yahoo News:
If we have a plan on the table that I think meets the goals that America has to set, and there are some things in there that I don't like ... I would consider it because that's the nature of how we govern in a democracy."
I remain skeptical of some of the drilling provisions, but I will give them (the bill's drafters) credit that the way they crafted the drilling provisions are about as careful and responsible as you might expect for a drilling agenda.
So what bill is Obama talking about and what's in it that would give him pause to reconsider opposition to offshore oil drilling?
The "Gang of Ten" Bill
Introduced last Friday, a bill which has become known as the "Gang of Ten" bill, otherwise know at the New Energy Reform Act of 2008, the legislation aims to bridge the gulf between supporters of alternative energy and supporters of offshore oil drilling.
Current renewable energy legislation is stalled in the senate, with disagreement over offshore oil drilling being cited as a reason for the current deadlock.
Some Offshore Oil Drilling Permitted...
In the new bill, areas in the Gulf of Mexico would be opened up for drilling by the federal government. Additionally, areas off the coasts of Virginia, North Carolina, South Carolina and Georgia would be opened up if those states approved. All drilling operations would have to be 50 miles or more offshore and all oil would have to be used domestically.
...But Renewable Energy Tax Credits Approved
Additionally, the legislation establishes a goal of 85% of new vehicles in the United States running on non-petroleum based fuels within 20 years. To enable this billions of dollars would be made available for R&D; for U.S. carmakers, consumers who purchase an alternative fuel vehicle would receive up to $7,500 in tax credits, and the same aforementioned renewable energy tax credits that are being held up in the Senate would be approved.
Kent Conrad (D-ND, pictured left), who leads the Gang of 10, has said:
"The comprehensive New Energy Reform Act of 2008...lays the groundwork to transition the nation's motor vehicle fleets to fuels other than gasoline and diesel. To ease gas prices in the interim, the proposal includes significant conservation provisions, consumer tax credits, and responsible measures to increase domestic production."
So basically, renewable energy supporters can have your tax credits, if offshore oil supporters are allowed to pump dry every single last drop of oil in the continental United States.
ANWR would not be opened to drilling under this legislation. Also, there's no word on exactly how, in a globalized market place, oil pumped from offshore areas would definitively end up in U.S. refineries.
More on this legislation at :: Reuters.
Recapping Why Offshore Oil Won't Reduce Energy Prices Short-Term
Most importantly, at least to my 'truthiness' meter, is that there is no language saying that more offshore oil drilling will rapidly reduce gasoline prices. Because it won't. To recap:
1) There are 17.8 billion barrels of "undiscovered recoverable resources" (not actual oil, mind you, but potential oil) in areas currently off limits, according to the U.S. Geological Survey.
2) The Energy Information Administration ays that once opened, leasing would not begin until 2012, production would not begin until 2017 and would not be of sufficient scale until 2030 to have any impact on the US oil or natural gas market. By this time offshore oil drilling would add approximately 250,000 barrels a day to the U.S. market, against an overall current demand of about 21 million barrels.
To use my father's vernacular: The amount of oil contained in offshore areas which are current off limits means bubkiss when compared to overall U.S. oil demand.
Is This Sort of Compromise A Bad Thing?
If Barack Obama were saying, as John McCain has, that offshore oil drilling will reduce energy prices in the short term, or that it is a real solution to U.S. energy independence, then I might feel more strongly about this. However, all he has done is say that he is willing to compromise.
In his own words, "What I don't want to do is...to be the enemy of the good here." Based on other quotes, the good he's talking about is more energy efficient and alternative fuel vehicles made in the United States, and renewable energy in general.
The debate I want readers to have (if I can be that directing) is this: Should supporters of renewable energy essentially 'throw a bone' to oil companies and their supporters, so that we can move ahead critical renewable energy promotion legislation? Should we not get so excited about the McCain/Bush rhetoric about reducing energy prices now, even though we know it to be false, if it will get us to the end position of getting more renewable energy online?
Personally, I don't think drilling offshore is worthwhile even as an interim step. The impact on U.S. energy independence and energy cost will be negligible, no matter if that oil comes online tomorrow or ten years from now. We need to be focussing all of our efforts on transforming the base structure of the US economy away from fossil fuels, not debating empty energy baby steps.
That said, I'm not sure where I stand on this compromise legislation, so let's sort it out.