McCain endorses 'big oil'' predictions to push offshore drilling
Republican Presidential candidate John McCain is relying on the projections of oil company executives to push his coastal drilling plan that would enrich those same executives -- who by the way aren't already exploiting every opportunity they have to drill where they're already allowed to.
At a campaign stop in New Hampshire Tuesday, McCain said Congress must allow offshore drilling for oil and natural gas simply because the possibility to drill there exists. He dismissed suggestions that offshore drilling would have negligible effects on lowering the price of gasoline.
"The oil executives say within a couple years we could be seeing results from it. So why not do it," McCain said in Rochester, NH. "We need to do it."
Offshore drilling proponents point to industry estimates that oil could begin flowing in "three to four years," but environmentalists and Democrats say the amount of recoverable oil isn't enough to make a difference in prices to justify the environmental consequences.
The environmental blog Gristmill notes a recent study from the US Energy Information Administration that predicted offshore drilling likely wouldn't make any difference in prices until 2030. The same outlet calls McCain's proposal a cruel "hoax." House Speaker Nancy Pelosi denounced drilling plans in similar form.
“This call for drilling in areas that are protected is a hoax, it’s an absolute hoax on the part of the Republicans and this administration” Pelosi said last week. “It’s a decoy to punt your attention away from the fact that their policies have produced $4-a-gallon gasoline.”
McCain went on to argue that lifting the moratorium could affect short term prices because oil is traded on futures markets and a demonstration of extra domestic supply would cause traders to adjust their long term projections.
"When the president announced we were lifting the federal moratorium on offshore drilling, the price of oil went down 10 dollars a barrel. ... so it can have a beneficial effect in the short term as well as the long term," McCain said.
A $10 drop in per-barrel oil prices did follow President Bush's ultimately meaningless gesture last week to lift a moratorium on coastal drilling (a Congressional drilling ban remains in place). But reports on the price drop said it was a response to gloomy economic forecasts from US Federal Reserve Chairman Ben Bernanke who said rising prices were driving down demand for oil and gasoline. And a nearly identical price drop preceded Bush's speech by a week before the prices shot back up.
Investors Business Daily, in a pro-drilling editorial laid out a similar futures-market argument to open the coasts, pointing out that Ronald Reagan eased restrictions on drilling in 1981 and prices fell by 1986.
However, the oil glut of the mid 1980s had many causes beyond Reagan's gesture, including an increased emphasis on conservation inspired by the energy crises of the 1970s.
Democrats also argue the oil companies are not taking advantage of the offshore leases they already have. Of 43 million leased acres, only 8 million are producing oil, they say.
One of the biggest oil companies, ExxonMobil, is seemingly less concerned about finding new domestic oil now than they were in 1981, at least if their spending priorities are to be believed. As of last year, the company, which formed in a 1999 merger, was spending 60 percent as much looking for oil than Exxon and Mobil did in 1981. The same company has been turning out record profits for the last several years, as gas prices have soared.
This video is from CNN.com, broadcast July 22, 2008.
Download video
| 
