Wednesday, August 6, 2008

Offshore drilling choices


By DAVID REINHARD

A few weeks back I spoke with U.S. Rep. John Peterson, and the Pennsylvania Republican told me about one House Democrat he almost persuaded to vote to expand oil and natural gas drilling in the nation's outer continental shelf.

This Democrat would vote for the bill, he told Peterson, if Peterson could assure him that lifting the decades-old ban on offshore drilling would not lower U.S. gasoline prices.

That's right, Peterson's Democratic colleague wanted to keep gasoline prices high to encourage conservation. I didn't pass this along in a June 26 column on Peterson's legislative efforts, in part because he wouldn't name his colleague. I was uneasy about using the Republican's story about an unnamed Democrat's affection for high gasoline prices, though I think there are folks who don't mind somebody else's pain at the pump if it leads to ending our nation's oil "addiction."

I pass it along now for two reasons. One, Democratic congressional leaders seem determined to stop even a vote on legislation to increase domestic oil and gas drilling. They're ready to send Congress out on summer vacation with no break in sight for U.S. energy consumers. Two, a Democratic senator was bold enough to make plain in public what her more politic, no-drill colleagues won't: Worrying about increasing domestic oil and natural gas supplies to meet demand is so yesterday.

On Bloomberg TV's "Money and Politics," Washington Sen. Maria Cantwell was asked if Senate Democrats would do anything to increase U.S. oil production to lower gas and natural gas prices.

"Oh, we definitely want to move beyond petroleum," she replied.

"And so there will be a supply-side proposal offered by the Democrats, and it will include everything from battery technology to making sure that we have good domestic supply ... moving faster on those kind of things, like wind and solar, that can help us with our high cost of natural gas."

Yes, supplies that are years away from becoming adequate, practical alternatives to oil and natural gas. Supplies that won't help drive down oil and natural gas prices for a long time to come. Supplies that will definitely move us beyond petroleum but not without a lot of state-imposed pain for U.S. consumers.

That pain comes in the form of policies that manufacture scarcity.

How so? Right now, thanks to the ban Congress has passed each year since 1982, 85 percent of the outer continental shelf off the lower 48 states is closed to U.S. gas and oil exploration.

Conservative estimates for the outer-continental-shelf reserves come in at 8.5 billion barrels of oil and 29 trillion cubic feet of natural gas, though there may be far more—86 billion barrels of oil and 420 trillion cubic feet of gas, according to some—since the government has not allowed modern measurement there in three decades. This drilling moratorium might have made sense in an era of $1-a-gallon gasoline or even $2-a-gallon gasoline. But at $4-a-gallon or perhaps $5-a-gallon gasoline? Shouldn't Congress, at least, have a debate and a vote on this?

Maybe not if you've already decided we need to move beyond petroleum, or hope sky-high gas prices will force Americans out of their single-occupancy vehicles and onto buses and bikes. But there are plenty of Americans who understand that Cantwell's alternatives are not yet ready to take the place of oil and natural gas in their lives or our economy.

Although opening up the outer continental shelf would send an instant signal that we're going to do all we can to tap our own resources going forward, ending the drilling ban isn't an immediate fix to high gas prices or the coming winter's heating bills. So what? Isn't leadership looking out over the next decade and putting plans in place to address the future?

We need to worry about the summers and winters five, 10 or 15 years from now—and be practical about doing so. Wind, solar and other alternative fuels are energy sources of the future, too. Unlike oil and natural gas, however, they're by no means proven, practical technologies capable of replacing petroleum in our economy.

The fact is there is no immediate fix. Clearly, oil speculation isn't a big part of the problem. It's worth noting that oil and gasoline prices fell dramatically last week—and early this week—as Cantwell and Senate Democratic leaders tried to ram through an oil-speculator bill and prohibit even a vote on increased domestic production.

Crafty speculators as the root of all our oil ills?

Yeah, so crafty that they're manipulating prices downward.




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