April 2, 2010
by Irwin Stelzer
President Obama this week offered the "Drill, Baby, Drill" crowd an olive twig when he announced that he would "consider potential areas for development [of oil and gas resources] in the mid-Atlantic and the Gulf of Mexico." Confine yourself to one cheer. Large swathes of potentially productive lands remain off-limits.
Speaker Nancy Pelosi, D-Calif., doesn't want any drilling off the West Coast, and the environmentalists are adamant that large parts of Alaska remain the preserve of caribou. So oil and gas companies will have to be content with access to the Atlantic coastline from New Jersey south, the eastern Gulf of Mexico and the north coast of Alaska.
Since there has been very little exploration in these areas, no one really knows how much oil and gas they might contain. Actual drilling will not take place for four years, some of the areas cannot be opened without congressional approval, and we won't know which areas will be offered for lease until the 2012-2017 lease plan, still a work in progress, is announced.
As is his habit, the president positioned himself in what he argues is the center, between environmental extremists who oppose any drilling, and the "Drill, Baby, Drill" crowd that would probably see nothing wrong in drilling even where the environmental costs exceed any possible benefits.
His hope is that in the process he can placate the large majority of voters who favor developing domestic resources, in the (mistaken) belief that this will prevent future spikes in gasoline prices. And possibly give him a bargaining chip when the climate change bill now being crafted comes up for consideration.
After all, if coal-state Democratic senators dig their heels in, and oppose any bill to cut CO2 emissions, the president will need some Republican votes to get whatever is to replace the deceased cap-and-trade bill.
It is no smooth path from presidential reconsideration to drilling.
Outraged environmental groups will fight the issuance of drilling permits in Congress, in the rule-making proceedings, and in the courthouses. These groups have developed a can't-lose strategy when opposing the permitting of new coal plants: Their legal teams delay decisions for so long that companies, which have to get on with planning their capital expenditures, simply give up, and walk away from their projects.
No matter that they might eventually have won in the courts; time is money, and delay too costly. Unless the president is as willing to cajole, threaten and bribe these groups as he was the Democratic congressman who were reluctant to support his health care bill, there won't be much new offshore drilling.
More important, and this is no fault of the president's, even if these offshore areas are eventually opened up, their development cannot eliminate the security threat and economic consequences of our dependence on foreign oil. Fuel autarchy is not in our future.
There just isn't enough oil offshore to replace our imports from unfriendly countries such as Venezuela and Saudi Arabia. No matter what happens in the newly permitted areas, we will need their oil.
And no matter what happens, low-cost Saudi Arabia will still be the swing producer able, if not to set the price of oil precisely where it would like it to be, to determine the range in which prices will fluctuate. Independence from foreign oil is not an attainable goal. A review of our Strategic Oil Reserve policies might be even more important than the president's reconsideration of offshore drilling.
But let's not be churlish. The president has moved a bit in the direction of nuclear power and offshore drilling. Give thanks for small favors.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.
Home | Learn About Hudson | Hudson Scholars | Find an Expert | Support Hudson | Contact Information | Site Map
Policy Centers | Research Areas | Publications & Op-Eds | Hudson Bookstore
Hudson Institute, Inc. 1015 15th Street, N.W. 6th Floor Washington, DC 20005
Phone: 202.974.2400 Fax: 202.974.2410 Email the Webmaster
© Copyright 2013 Hudson Institute, Inc.