With oil prices hovering around $4 a gallon, President Bush recently lifted the executive portion of the Outer Continental Shelf Moratorium on offshore oil drilling. This moratorium bans new drilling along the United States’ Atlantic and Pacific coasts, the northern coast of Alaska, and the Gulf coast of Florida, although a few companies who acquired rights before the 1981 implementation of the moratorium have permission to drill in certain areas under a grandfather clause.
There is no moratorium on drilling along the Gulf coasts of Alabama, Louisiana and Texas, where hundreds of oil platforms pierce the horizon. The royalties alone from oil drilling provide the state of Alabama with $500 million a year.
Republicans, McCain Change Position on Coastal Drilling
The Congressional component of the moratorium is still intact – for now. However, key Republicans have shifted their stance on the ban as popular discontent over high prices intensifies. These include Florida governor Charlie Crist, who only months ago supported the ban, and Senator John McCain, who also supported the ban during his 2000 presidential campaign.
McCain has even made oil drilling off the Gulf Coast a rallying cry for his 2008 campaign. His official campaign website claims that “We have trillions of dollars worth of oil and gas reserves in the U.S. at a time we are exporting hundreds of billions of dollars a year overseas to buy energy.” Furthermore, McCain’s website proposes “it is time for the federal government to lift [the moratorium] and to put our own reserves to use” (www.johnmcain.com).
Risks and Benefits of Coastal Oil Production
But will drilling off the coast really ease gas prices? According to the Department of Energy, it would take 20 years to bring new leases into full production, and even then the impact on gas prices would be negligible. Furthermore, oil companies already have 7,000 leases to drill offshore, but only about 20% of those leases are currently producing oil.
Coastal drilling also heightens environmental risks and jeopardizes tourism to the beaches of Florida – a $50 billion industry. Hurricane Katrina, for instance, destroyed 123 oil platforms, sending 9 million gallons of oil into the Gulf and covering parts of New Orleans in a mix of crude and mud.
Supply, Demand and Oil Company Profits
The root of the problem is this: while the United States only possesses 3% of the world’s oil supply, it consumes 25%. For example, even if oil companies pumped every drop of oil from the coast of Florida – a little under 4 billion barrels – it would only quench America’s thirst for oil for 176 days. Thus, the only effective way to reduce American dependency on foreign oil is to consume less.
High gas prices have coincided with record profits for oil corporations. In the first quarter of 2008, the five largest U.S. oil companies posted profits of $37 billion. In July, Exxon announced that it had broken its own record for the highest profit ever by an American corporation with $11.68 billion in profits. Despite this, oil companies currently receive about $10 billion in tax breaks from the U.S. government.
Sources
“GulfCoast states mull over oil drilling ban”, by Debbie Elliot. www.npr.org, July 14, 2008.
“Battle Looms Over Oil Drilling Off Florida’s GulfCoast,” by Matthew Biggs. Reuters.com, June 26, 2008.
“Gulf drilling's policy effects 'horrendous,' Graham says,” by Larry Lipman. PalmBeachPost.com, June 20, 2008.
“Oil companies have lots of leases to drill,” by Joe Biden. Wilmington News Journal, July 9, 2008.
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