Profit and politics:the offshore drilling debate - Research Paper Example

Profit and Politics: The Offshore Drilling Debate The history of offshore drilling is one of technological advancement and innovation tailored to the interests of overwhelming (many would say excessive) domestic demand for oil. From its beginnings in the waters off Santa Barbara, California, in 1896, offshore drilling for oil reserves has traced a precipitous arc that reflects America’s exponential rise in oil consumption dating from the early years of the 20th century. This is uniquely illustrative of a nation transforming from a primarily agricultural economy to a highly mechanized, production-based system. The extension of oil drilling operations further and further into the waters off the West Coast and, most notably, into the Gulf of Mexico, has coincided with the economic boom that catapulted America into the forefront of world affairs. But the story of offshore drilling and the political debate that has always attended its growth is much more than an economic epic – it’s also a textbook example of the interplay and conflict between government and the environment. This volatile issue continues to highlight discussion at the federal level and in affected states such as Louisiana, Texas, Alaska and California. The same technological know-how that has enabled America’s large oil producers to find new ways of extracting oil from beneath the oceans holds vast promise for the development of new energy sources. New discoveries in the fields of solar, wind and electrical power have Name 2 diversified the way many Americans think of energy, yet much pioneering work remains to be done in these areas before they are ready to relieve the oil industry of its traditionally heavy burden. With oil still the most effective means of meeting the nation’s energy demands, the debate over the technological, economic and environmental ramifications of offshore drilling is certain to remain an important one in the political arena for many years to come. As such, all parties involved in the debate must find ways to compromise and accommodate opposing viewpoints if the nation’s future energy challenges are to be met. Benefits Offshore drilling, particularly the deep water operations, are very expensive propositions. Some of the newer deep water rigs cost upwards of $4 billion and, with new safeguards arising from the 2010 BP catastrophe, they are likely to become more costly still (“A Brief History of Offshore Oil Drilling,” 13). Yet thanks to the industry’s commitment to offshore drilling, it is strong enough to easily cover such expenses. “Investments in offshore drilling have contributed to the reversal of a long-term drop in U.S. oil production. Total U.S. oil production recorded year-on-year growth in 2009 for the first time since 1991, and the U.S. Energy Information Administration has projected additional increases in the coming years” (Ibid, 13). The windfall for the U.S. government has also been considerable, with leasing agreements producing as much as $18 billion a year since the onset of large-scale drilling operations in the waters of the Gulf of Mexico. In 2005, the Energy Policy Act established the “Coastal Impact Assistance Fund,” which provided for the disbursement of $250 million to states for the Name 3 development and protection of coastal areas and wetlands that are affected by offshore drilling. Alabama, Alaska, California, Louisiana, Mississippi and Texas have shared this important federal source of revenue. (U.S. Fish and Wildlife, 1). In spite of the horrific financial and human costs of the 2010 explosion and spill, a federally appointed commission determined that the nation derives substantial benefits from offshore drilling, which provides a significant portion of America’s domestic energy supply. Offshore wells are responsible for one-third of all U.S. oil production and have helped offset declines in oil production in other parts of the country in recent decades (National Commission on BP Deepwater Horizon Oil Spill, 294). It has been estimated that America’s outer continental shelf holds an estimated 85 billion barrels of oil, which outstrips the combined potential of onshore domestic drilling and shallow water operations (Ibid, 294). Clearly, the benefits of offshore drilling still outweigh the challenging and well-documented impediments to making it a reliably safe and efficient means of production. The Republican view Republicans have often been identified with “big oil” interests. In recent times, the two Bush administrations offer clear examples of the connection between government and the oil business. Before the BP Deepwater Horizon disaster, GOP leaders in Washington and in the oil-producing states led the charge to “drill here and drill now” (Hulse, 2010). That refrain took on a far softer, more politically sensitive tone after the Gulf spill though Republicans, for the most part, did not abandon their support of offshore drilling. As recently as 2008, conservatives in Name 4 Congress had scored a major success in the matter of offshore drilling, successfully breaking through Democratic opposition to the scuttling of a ban on coastal drilling. Congressional Republicans rose to meet the political challenge in 2010 through their involvement in the investigation of the Gulf disaster. They also pointed to their support of a multi-faceted energy program and used the opportunity to blame the Obama administration for not having acted quickly enough and done more in the weeks after the spill (Ibid, 2010). Soaring gas prices have empowered Republicans to step up their support of offshore drilling. In early 2011, House Republicans pushed through the “American Energy Initiative,” which calls for an increase in offshore drilling in the Gulf of Mexico as well as the Atlantic, Pacific and Arctic oceans (Taylor, 2011). The act is designed to speed up the federal approval process for new drilling leases, setting a two-month limit on the review process and forcing rapid approval of leases that were suspended after the BP oil spill. However, the political process caught up with the bill in the Senate, which brushed it aside by a wide margin. The debate over the Republicans’ initiative is in the tradition of the decades-old political “push-pull,” with Republicans accusing Democrats of impeding attempts to procure badly needed fuel resources and Democrats countering with charges that GOP legislators are too accommodating when it comes to large oil company interests. The Democratic View Democrats have long had a politically “schizophrenic” relationship with the oil companies. In Louisiana, a state with strong traditional ties to the Democratic party, Name 5 the oil interests have for generations wielded powerful influence. Massive amounts of oil money has been injected into the picture, some of which has been used for the public good, while some of it found its way into the pockets of local politicians. At the national level, Democrats have been some of the staunchest protectors of America’s coastal environment, a classic example being the furious debate over offshore drilling that arose from the 2007-08 increase in gas prices. The Bush administration sought to use pump prices as political leverage in quashing Democratic resistance to offshore drilling. President George W. Bush and Speaker of the House Nancy Pelosi played out a long-familiar scenario in Washington. Pelosi led the Democrats’ opposition to more drilling, calling instead for higher taxes on record profits enjoyed by the major oil producers (Zelizer, 167). Public opinion, the great political “leveler,” forced a compromise: “Aware that the public overwhelmingly favored lifting the Congressional ban on offshore drilling, Pelosi agreed to a compromise” (Ibid, 167). As in 2008, political expediency does sometimes take a hand in the drilling debate and the political stances of Democrats and Republicans. But the two parties have become so strongly identified with the opposing viewpoints on offshore drilling that they have, to a large extent, become captive to an innate public expectation. “Because Democratic leaders are mostly pro-environment and Republican leaders are mostly pro-development, their statements about energy issues should help Democrats learn that they should be pro-environment and Republicans learn that they should favor development” (Smith, 168). In other words, supporters of each party have a built-in expectation that their representatives will remain faithful to the dictates of ideology. Name 6 Cost America has only two percent of the world’s oil reserves but its citizens use a fourth of all oil produced (Energy Information Administration, 2009). While it may be true that America’s coastal areas contain reserves of oil vast enough to meet this need, the big oil companies remain by far the largest beneficiaries of these resources. Over the past 10 years, BP, Shell and the other major producers have recorded more than $800 billion in profits while U.S. consumers continue to pay a hefty price in gas prices and in taxes. However, in a 2009 issue of Energy Economics, a study by two prominent American economists reported that the cost benefits of offshore drilling would outweigh the costs incurred through the consequent environmental damage. Producing enough oil in previously untapped coastal areas to charge $50 per barrel would yield $492 in revenues, and $42 billion in lower oil prices. Totaling the costs of operating offshore drills, damages from the production of greenhouse gases and other environmental costs would amount to an estimate of $255 billion. Thus, the study determined that, despite the high cost of “doing business,” offshore drilling remains an important and profitable means of acquiring oil supplies. Conclusion Americans continue to consume oil and gas products at a dizzying pace. As studies have shown, there are at present no viable substitutes, at least none productive enough to enable offshore drilling operations to be significantly scaled back. Nevertheless, the hard lessons learned from the BP Gulf spill and other environmental disasters have helped bring America Name 7 closer to a “golden mean” in which oil producers have sufficient leeway to keep up with demand and the federal government has enough regulatory power to avert potentially destructive practices. It is to be hoped that partisans on both sides of the offshore drilling debate will continue to maintain a spirit of compromise and serve the best interests of America’s oil consumers and protect the nation’s myriad environmental assets. Name 8 Works Cited “A Brief History of Offshore Drilling.” National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. 2010. Web. “Coastal Impact Assistance Program.” Fiscal Year 2012 Budget Justification. U.S. Fish and Wildlife Service. 2012. Web. Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling. National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. 2010. Hahn, R. and Passell, P. “The economics of allowing more U.S. oil drilling.” Energy Economics. Vol. 32, 3, May 2010. Hulse, Carl. “Republicans’ Calls for Offshore Drilling have Grown Quieter.” New York Times. 8 May 2010. Smith, Eric R.A.N. Energy, the Environment and Public Opinion. Lanham, MD: Rowman and Littlefield Publishing. 2002. Taylor, Phil. “House GOP Scores Early Victory in Offshore Drilling Initiative.” New York Times. 14 April 2011. “World Proved Reserves of Oil and Natural Gas.” Energy Information Administration. 2009. Web. http://www.eia.gov/emeu/international/reserves.html. Zelizer, Julian. The Presidency of George W. Bush: A First Historical Assessment. Princeton, NJ: Princeton University Press. 2010. Read More