White House eyes offshore oil
President Bush says the Senate should repeal the moratorium on offshore oil drilling to help bring down gas prices. Senate Democrats call the move a campaign ploy and not a long-term solution. John Dimsdale reports.
An offshore oil platform (Marcel Mochet/AFP/Getty Images)
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Bob Moon: Glad you're here on this Wednesdsay, the 18th of June, a day that began with President Bush suggesting the country can drill its way toward lower oil prices.
His response to the soaring price of gasoline is opening America's coasts and Alaska's North Slope to oil prospecting. He's also pressing Congress to get rid of red tape that he claims has hindered the expansion of the nation's oil refining capacity.
So, would more domestic drilling bring down pump prices? As Marketplace's John Dimsdale reports, it depends on whom you ask.
John Dimsdale: President Bush says it'll be a while before the country can switch from oil to environmentally clean fuels.
President Bush: And that means we need to increase supply, especially here at home.
The President said there are 18 billion barrels of oil within easy reach of the U.S. coastline.
Rayola Dougher at the American Petroleum Institute says those deposits could boost the nation's oil supply by one to two million barrels a day within seven years.
Rayola Dougher: The spare capacity in the world, the difference between supply and demand, is about 1.5 million barrels and it's that thin line that's pushing the price up right now. We import 11 million barrels a day, so I look at that one to two as pretty significant to the United States and to the world.
The American Council for an Energy Efficient Economy figures the nation will save an equivalent amount -- two million barrels a day -- just from the latest increase in fuel efficiency requirements for cars, but not until 2025.
And will the extra offshore oil be any cheaper? Joel Darmstadter at Resources for the Future, a Washington think tank, says that depends on the world market.
Joel Darmstadter: Why should a United States producer expect any less for the oil that he is producing than the oil that can be fetched on the world market. And that would mean the payoff in terms of dollars and cents at the pump is likely to be much more in the cents area than the dollar area.
That incremental consumer benefit, he says, has to be weighed against the social costs of potential ecological damage.
In Washington, I'm John Dimsdale for Marketplace.
Comments
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From Mansfield Center, CT, 06/24/2008
Unfortunately, drilling America for new oil will not alter the real two sources for higher oil prices. One is the devaluing of the dollar, which can only be countered by a rise in interest rates, which would lead to more mortgage defaults. The other cause is the Enron loophole Congress made in December 2000.
Drilling would be done off two states run by Republican governors. Neither Schwartzeneger nor Jeb Bush want offshore wells scaring away beach tourists.
As for the above poster's claim of not giving money to the Saudis, she forgets where they put their money. That's right, our T'bills and our real estate and businesses. We get most of our oil dollars back, because the Saudis really need us to be flush...after all, they sell their oil in our currency, and buy our weaponry to stay in power.
From Lancaster, PA, 06/19/2008
Your coverage about lifting the ban on offshore drilling neglected to mention two other potential benefits: energy sercurity and job creation. Even if the price of gas does not drop a cent in the US as a result of drilling offshore, we still stand to benefit as a nation. If we have developed our own local sources of oil, we are less vulnerable to geo-political instablities. Another reason to drill here is to keep our dollars in the US economy. Every time we buy oil from the Sauidi's, we are transferring more of our wealth to their country. It would benefit the US economy much more if the revenue from oil sales stayed in our country and generated wealth here, not wealth in Abu Dhabi.
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