At the 2008 Republican National Convention, former Maryland Lt. Gov. Michael Steele started the chant at the end of his keynote address, and former New York City mayor Rudy Guiliani picked up on it. Drill, Baby, Drill. It went down big with the audience present, but is Drill Baby, Drill — a variation of Presidential candidate John McCain’s earlier “Drill here, drill now” slogan — the answer that will bring down gasoline prices?
Veteran oil man turned wind power maven T. Boone Pickens advocates a bold plan that sees wind energy replacing natural gas as a power plant fuel, and natural gas replacing oil as a transportation fuel. He argues that the drill or not drill argument is a false one. An oilman, he falls on the drill, drill, drill side of the argument, but that the short term gain of a little more drilling cannot overcome the hard facts. The US has 3% of the world’s oil and gas reserves, but consumes 25% of its energy. His conclusion, “this is one problem the we can not drill our way out of .“
However, feeling the heat from public opinion polls that show a majority of Americans supporting new drilling, and from Democratic House members representing conservative areas where pressure for oil drilling is strong, the House of Representative held a vote on offshore drilling last week.
The bill lifted the 25-year old federal ban on offshore drilling for oil and gas. In sum, the House approved by a vote of 236-189 to open the waters 50 miles and farther out from the US coasts to offshore drilling, if the adjacent states agree to go ahead with drilling.
The bill also calls for rolling back $18 billion in tax breaks over the next 10 years for the largest oil companies (including Exxon Mobil, BP, and Royal Dutch Shell) and using the revenue for tax incentives to help commercialize alternative energy (solar, wind and biomass) and to support programs that promote energy efficiency.
Republicans protested, claiming that most of the significant oil finds are closer to the shore (citing an Interior Department report that concludes that 88% of the 18 billion barrels of oil believed to be available offshore are within that 50 miles of the US coastline) than the new drilling provision allows.
It is likely that they can save their breath. The Senate is in no mood to pass this or any similar legislation, and even if it did, several Republican-led states (California and Florida in particular) are very wary of offshore drilling, fearing that oil spills and unsightly rigs (especially if built at some future date in sight of land) would kill the multibillion coastal tourist industries in those states.
And even if a pro-offshore bill is finally passed by both chambers, actual production from new fields is probably at least a decade or more away, given the time it takes to get permits, conduct surveys, do experimental drilling, set up and develop fields, and get the oil or gas online.
Prices at the pump are affected by much more immediate circumstances, like consumer and industrial demand on the available oil supply, hurricanes shutting down refineries, and the fluctuating price of crude oil futures. Earlier this week, oil prices jumped more than $25 dollars, (its largest single day jump ever, before it fell back to a still record-breaking $16 rise on the session) as the dollar’s value melted in the wake of the financial services market crisis in the US.
If the US economy doesn’t get a soft landing at the end of the white-knuckle ride it is currently experiencing, then Drill, Baby, Drill may be a moot point.
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