Republican nominee John McCain’s answer to energy independence includes the dubious but superficially attractive pledge to end the ban on offshore drilling.
But like his gas-tax holiday proposal, McCain’s desire to drill in the outer continental shelf doesn’t make any sense economically.
McCain who has accepted more than $1 million from Big Oil donors is hoping that voters who are outraged by the high cost of gas will support his desire to find new domestic sources of oil and natural gas. According to McCain, drilling for oil off the shores of California, Virginia or Florida will add more oil to the international market which will then lower prices and reduce America’s dependence on expensive, foreign oil. President George Bush has echoed McCain’s proposal and has lifted the presidential moratorium on offshore drilling, although the Congressional ban remains in place until 2012.
But according to the “official energy statistics” from the federal government’s Energy Information Administration (EIA), there isn’t enough oil in the “off-limits” offshore areas to make a dent in world supplies or the cost of gas. Its meager impact wouldn’t begin until 2012 at the earliest, and “is not projected to increase substantially by 2030”not exactly an immediate solution to today’s high gas prices.
An Insignificant Impact
The United States already allows off shore drilling in the Gulf of Mexico, where oil and natural gas are relatively easy to extract.
The EIA found that, as of 2003, there were about 40.92 billion barrels of technically recoverable undiscovered crude oil in the Gulf of Mexico. In contrast, there are only 18.17 billion barrels of crude oil in “off-limits” offshore areas in the Pacific, Atlantic and a small portion of the eastern Gulf of Mexico. So why not drill where it is currently legal and supplies are greater?
Allowing offshore drilling in off-limits areas would only increase production by about 3% within the United States by 2030. The EIA found that since oil prices are determined on the international market, the additional offshore oil would have an “insignificant” impact on the world price of oil.
And even if McCain and his Big Oil supporters are able to access the off-limits oil, it won’t be easy or cheap.
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“Although a significant volume of undiscovered, technically recoverable oil and natural gas resources is added [in the analysis], conversion of those resources to production would require both time and money,” the EIA report concluded. “In addition, the average field size in the Pacific and Atlantic regions tends to be smaller than the average in the Gulf of Mexico, implying that a significant portion of the addition al resource would not be economically attractive to develop…”
Opponents to McCain’s proposal claim that Big Oil companies already have plenty of accessible oil reserves within the United States but they’re sit ting on them while consumers are forced to pay high gas prices. According to Sen. Russ Feingold (D-Wis.), more than 75% of currently leased or available for lease federal lands and waters are not producing oil and gas, areas that could produce 100 billion barrels of oil. Feingold has introduced the Responsible Federal Oil and Gas Lease Act, which would require oil and gas companies to produce or “diligently” develop the land that they already lease or they’ll be forced to give up their leases.
The Political Impact
While McCain’s idea may be polling fairly well nationally, it isn’t supported by those who would be most affected by it. Although increasing offshore drilling would only produce modest returns, it could critically endanger the fragile ecosystems, shores and beaches that residents of California and the Atlantic states would like to preserve.
McCain’s proposal has been met with strong opposition from California residents, including fellow Republican Gov. Arnold Schwarzenegger, who told reporters, “I know people are frustrated with the soaring price of gas, and I welcome the national debate on solutions to lower our energy costs, but in California we know offshore drilling is not the answer.”
By supporting offshore drilling, McCain may be ceding California’s massive electoral votes to Democratic challenger Barack Obama, who already leads in that state. McCain may be betting that voters in critical Midwestern states that wouldn’t have to cope with the negative impacts of offshore drilling such as Wisconsin, Michigan and Missouri could fall for his attempt to link offshore drilling to lower gas prices.
Yet these states would greatly benefit from plans to increase wind and solar energy throughout the Midwest. The creation of wind farms located in Lake Michigan has been proposed, an “off shore” energy source that, unlike drilling for oil, is clean, renewable and sensible.
