Bush Lifts Executive Ban on Offshore Drilling

Posted on July 14, 2008

President Bush lifted an executive ban on drilling on the Outer Continental Shelf. The ball is now in Congress' court: no drilling can begin until Congress approves.

By itself, the move will have little impact, because Congress enacted a moratorium in 1982 that remains in place. But the step underscores the rising political pressure to address high oil and gasoline prices in the middle of an election year. "Failure to act is unacceptable," the president said, asserting that obstructionists in the Democratic-controlled Congress have been blocking progress on energy exploration and that "now, Americans are paying at the pump."
Mr. Bush said some experts believe that drilling on the Outer Continental Shelf could yield a decade's worth of oil for the United States, and that exploiting it could be done unobtrusively, without damaging coral reefs or creating spills. He said Congress was "the only thing standing between the American people and these vast oil resources."
Congressional Republicans, who believe they have been making political headway on the drilling issue, lauded the president's action, but the immediate reaction from the Democratic leadership was dismissive. They accused the White House of exploiting the issue for political purposes and said the administration could take steps to accelerate exploration of tracts already available to oil companies if it was serious about boosting domestic production.
"We want oil and gas companies to drill for oil on the leases they have been given," said Senator Harry Reid of Nevada, the majority leader.

Nancy Pelosi says that drilling offshore won't affect prices now. But that is simply not true. The market will react if there is an expected major increase in supply because of new drilling. Perhaps she wasn't paying attention in Econ 101?

But what's most disturbing about this debate is the Democrats' demonizing of the oil companies. Instead of having a blunt and open discussion of our nation's energy policy, the Democratic leadership seems bent on using emotion, not facts. Take the windfall profits tax, for example. It costs an incredible amount of money to drill for oil and natural gas. The companies that make those so called "obscene" profits are all publicly traded companies. The shareholders are American taxpayers, pension funds, teachers unions and the like. Eventually, there will be no profits at all from fossil fuels as the planet is eventually forced to stop using what is a finite resource. These profits won't last forever.

The windfall profits tax was ineffective last time it was enacted; it raised very little revenue for the government and discouraged American companies from drilling. That's why it was overturned. But some lessons must be learned over and over again, it seems.