Bush Lifts Executive Ban on Offshore Drilling – Why it Matters and Why it Doesn’t
In a largely symbolic move, President George W. Bush ordered to lift the Executive Order banning the drilling of offshore oil wells in the U.S.. However, the move will have no effect on the current regulations on offshore drilling because there are two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by Bush the elder in 1990.
“Today, I’ve taken every step within my power to allow offshore exploration,” Bush told reporters today at the White House. “This means the only thing standing between the American people and these vast oil resources is action from the U.S. Congress.”
But actually, there are a few other things standing between the American people and “these vast oil resources,” the most significant being capitalism and global energy markets.
Opening up offshore oil drilling would not have an immediate impact on oil prices for two principle reasons: First, because oil exploration and development takes years, not months. And second, because there is no way of guaranteeing that any petroleum yielded from offshore projects will remain in U.S. markets. Once that crude oil leaves the seabed it becomes fair game on the open market.
The U.S. Energy Department’s forecasting arm has said opening the Pacific, Atlantic and eastern Gulf of Mexico regions to drilling “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.”
Almost a month ago, Mr. Bush called on Congress to lift their ban on offshore drilling and said he would lift the presidential ban. Despite the action from Bush, Congressional leadership has not been terribly interested in lifting the ban. House Democratic Speaker Nancy Pelosi called Bush’s plan a “hoax.”
Fadel Gheit, oil and gas analyst with Oppenheimer & Co. Equity Capital Markets Division says, “If we were to drill today, realistically speaking, we should not expect a barrel of oil coming out of this new resource for three years, maybe even five years, so let’s not kid ourselves.”
Democratic leaders are in stead, calling on the president to release a small portion of oil from the Strategic Petroleum Reserve. They have already passed a law to temporarily stop the administration from continuing to fill the SPR, which is currently at 700 million barrels of oil. “Taking oil out of the Strategic Petroleum Reserve in a careful, responsible way is the fastest way to bring down the price at the pump,” said Speaker Pelosi last week.
Monday’s announcement from the President Bush is not important because it will have any appreciable effect on the price of oil, but because it is further evidence that the Bush administration is afraid of tackling the structural root-causes of our sinking economy and believes that quick supply-side fixes are the answer to all of our economic problems.
Other Posts on the Politics of Offshore Drilling
- “McCain Calls for Offshore Drilling: What Else Would He Say in Houston?”
- “Offshore Drilling Ban Opens Door for Other Domestic Oil Options”
- “Americans Want to Drill”
Photo: dsearls via flickr under a Creative Commons license