United States: Bush tries to open offshore
PRESIDENT George Bush responded to pressure from the energy industry last month by ending an executive order banning drilling for oil and gas in certain offshore areas. Bush said this would relieve pressure on Americans going through a "difficult time", as the cost of gasoline and energy rises in line with international oil prices.
The White House claims up to 18bn barrels of oil and 86 trillion cubic feet of natural gas could lie in areas of the Outer Continental Shelf (OCS) that are off-limits to developers. The US' Department of Energy estimates the country's total proved reserves, excluding the OCS, to be around 21bn barrels of oil.
"The time for action is now," said the president. "This is a difficult period for millions of American families. Every extra dollar they have to spend because of high gas[oline] prices is one dollar less they can use to put food on the table or send a child to school."
Bush then put pressure on the Congress, which he said had failed "to enact common-sense solutions". He added: "All that remains is for the Democratic leaders in Congress to allow a vote. The American people are watching the numbers climb higher and higher at the pump – and they're waiting to see what the Congress will do."
The White House's decision to lift the moratorium, which was first put in place by the president's father, George Bush Senior, in 1990 and extended by Bill Clinton, could yet mean nothing in practice: Congress' own moratorium has been renewed annually since it was enacted in 1981. Also, individual states may block development. California, whose offshore is thought to include most of the 18bn reserve, has already expressed its dismay at the White House's decision.
Indeed, commentators say Bush's action will simply entrench political division over the issue, with Democrats unlikely to vote for a repeal. Opposition politicians dismissed the White House's announcement as a "political stunt". California Democrat Nancy Pelosi, the speaker of the House of Representatives in Congress, described it as a "hoax" cooked up by "the oilman in the White House" that would "neither reduce gas[oline] prices, nor increase energy independence".
Barack Obama, the Democratic party's presidential nominee, also criticised the decision, saying it would only extend the life of the "failed" energy policies already in place. He called instead for greater conservation and an increase in the US' use of alternative energy.
However, Republicans, including the party's presidential nominee, John McCain, welcomed it – echoing the sentiment of executives within the oil industry. US energy firms have lobbied for the offshore – and protected parts of Alaska – to be opened to exploration for years.
Opec last month also joined the call for the US offshore to be opened. The group's president and general secretary, Chakib Khelil and Abdulla El-Badri respectively, asked why Washington should press other countries to increase access to their upstream sectors while maintaining a ban on development in their own. And addressing the World Petroleum Congress in Madrid, Saudi oil minister Ali Al-Naimi said "the limits to future petroleum supplies have more to do with politics than geology and resource availability". He added: "For example, the most promising acreage remaining in the US is offshore, most of which is off-limits to the industry."
The ban prevents drilling from three to 200 miles offshore the US coast, and was put in place to protect the country's marine habitat and prevent the threat of spills affecting its coastland. Limited acreage in the Gulf of Mexico is not included in the moratorium.
However, the White House says that since the ban was put in place "advances in technology have made it possible to conduct oil exploration on the OCS that is out of sight, protects coral reefs and habitats, and protects against oil spills". Along with high oil prices, that makes the ban "outdated and counterproductive", it claims.
Demanding new legislation to follow the lifting of the executive order, the White House said Congress should "take essential steps to expand domestic production from oil shale and in Alaska and to increase refining capacity." Oil shale "could provide the country with domestic oil supplies that are equal to more than a century's worth of today's oil imports". Opening protected areas in Alaska, Bush said, "could produce roughly the equivalent of two decades of imported oil from Saudi Arabia".
Even if Congress lifts the ban, analysts point out that the effect on oil prices – much less domestic gasoline prices – will take time. As important, however, could be the White House's demand that Congress also enable the expansion of refining capacity in the country.
The country has not built a greenfield refinery in over 30 years, despite rising consumption of energy products. Oil producers say the lack of processing capacity to handle heavier crudes is one force supporting international oil prices.