To Offshore Drill or Not To Offshore Drill....
Wednesday, June 18, 2008PAUL KANGAS: As gas prices head toward $5 a gallon, President Bush today asked Congress to lift the ban on offshore drilling exploration. That ban has been in place for almost three decades and as Darren Gersh reports, removing it won't be an easy sell.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The oil industry now has the technology to run dozens of wells from a single platform. That's just one example of how offshore drilling is much safer than it was when Congress limited it almost 30 years ago. Given such advances and with gas prices topping $4 a gallon, the president says it is time to lift the ban on offshore exploration.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Congress must face a hard reality. Unless members are willing to accept gas prices at today's painful levels or even higher, our nation must produce more oil and we must start now.
GERSH: Democrats agree oil companies should ramp up exploration. But Illinois Democrat Rahm Emanuel sats the place to start is on the 68 million acres on and offshore oil companies already lease, but have not yet explored.
REP. RAHM EMANUEL (D) ILLINOIS: What are you going to do with the leases you have today and are not drilling? If it's a capacity issue, then no other new leases is going to solve that.
GERSH: Industry analysts say the ability to explore is pinched by a shortage of rigs and trained engineers. So lifting the moratorium on offshore drilling won't necessarily lead to new production, unless the industry also ramps up spending. To make sure that happens, Rice University energy expert Amy Myers Jaffe says policy makers will have to get creative.
AMY MYERS JAFFE, ASSOCIATE DIRECTOR, RICE UNIVERSITY ENERGY PROGRAM: For those companies and there are several, who are not adding spending to their portfolios for oil and gas and we say we're offering this acreage, you don't bite? Then we're going to tax away some of your profits.
GERSH: Given the political standoff between the White House and Congress, no one expects the offshore drilling ban will be lifted anytime soon. But oil market analyst Phil Flynn believes shifting public opinion may eventually pressure Washington to act.
PHIL FLYNN, SR. MARKET ANALYST, ALARON: People are going to start doing the math and realizing that this is a luxury that they can no longer afford. It's doing damage to our economy, whether we want to admit it or not.
GERSH: And now for the usual energy spoiler alert. Analysts caution, even if the entire U.S. coastline were open for drilling right now, it might not do much to bring down prices at the pump. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
