Election 2012: America debates its offshore future17 August 2012 Chris Lo
In the lead-up to the US election, the future of American offshore oil and gas policy is being intensely debated by Republicans and Democrats. Chris Lo explores the political dimension of US offshore exploration and analyses the potential implications for the future of domestic oil and gas production.
In a landmark US election year, quarrels are hardly in short supply in the American political system. As is the case in the run-up to any presidential election, and certainly one as acrimonious as this year's, the spirit of disagreement has descended on Capitol Hill, spreading to every corner of the US as President Obama and his challenger Mitt Romney kick their campaigns into gear.
With Republicans and Democrats clashing over healthcare, the economy, tax avoidance and a raft of other issues, it's no surprise to find that America's national debate over the future of its offshore energy policy has been as contentious as any other.
The issues surrounding oil and gas drilling and exploration permits off the US coast have taken a place at the heart of the national conversation leading up to the elections, with Republicans seeking to position Obama as a blocker of traditional energy investment and a threat to US energy security (not to mention those all-important gas prices, now approaching four dollars a gallon). Meanwhile, the Democrats are working to reinforce the president's offshore credentials and remind the electorate of the risks of unrestricted offshore drilling.
Expanding offshore exploration: the House vs. the Senate
While both presidential candidates have had plenty to say on offshore oil and gas over the course of the campaign so far, much of the political manoeuvring on offshore issues has taken place in the US's legislative centre. Battle lines have been drawn right down the middle of Congress between the Republican-controlled House of Representatives and the Senate, where the Democrats have a majority.
The House made its energy intentions perfectly clear in late July, when it voted to revoke President Obama's five-year plan for offshore leasing and replace it with a far more expansive Republican-led proposal.
The new plan, H.R. 6082, would see the number of new offshore oil and gas leases almost double to 29, compared to the 15 sales laid out in Obama's plan, including controversial blocks off the coast of southern California, as well as Maine and Virginia on the country's east coast. Republican House Representative Doc Hastings, chairman of the National Resources Committee, argued that Obama's plan "effectively re-imposes the drilling moratoria lifted in 2008", and that the House's alternative represents "standing up for American energy and American jobs and moving our country forward".
John Fleming, another Republican congressman and member of the National Resources Committee, told Newsmax.TV that Obama's leasing plan would push big oil drilling projects out of US waters, driving up prices and holding back the country's economic recovery.
"The more you restrict what's available in the United States, the more likely that the equation is going to favour going to foreign countries," he said.
The Democrats respond to H.R. 6082
Unsurprisingly, the new proposal has provoked strong reactions from both the White House and Democrats. A White House statement issued on 23 July registered the administration's strong opposition to H.R. 6082, stating that it would "undermine the targeted, science-based, and regionally-tailored offshore development strategy that the American people and the states have helped develop over the last three years".
Another major concern that the administration has flagged up with the bill is that the oil rush it would create could leave environmental regulations struggling to keep up: "The bill also would establish unworkable deadlines and substantive and procedural limitations on important environmental review and other analysis that is critical to complying with laws, including the National Environmental Policy Act, the Endangered Species Act, the National Historic Preservation Act, and the Clean Water Act."
The statement noted that if the president was presented with the bill, his advisors would recommend that he veto it. This, along with the bill's poor odds of getting through the Democrat-led Senate, means that there is almost no chance that H.R. 6082 will pass into law under the current government, although it does signal Republican Members of Congress' intentions for offshore energy policy. If Romney wins the election in November, H.R. 6082 could form the foundation of US offshore leasing in the years to come.
Obama's "all of the above" energy strategy
As for the Republicans' broader accusations that Obama's cautious offshore policies and emphasis on renewables are increasing US reliance on foreign oil, the administration has defended the president's "all of the above" approach to energy strategy. Under the strategy, the US has invested heavily in renewable energy development while also increasing domestic oil and gas production to create a diverse energy mix.
The Chukchi Sea is situated offshore, north-west of Prudhoe Bay, Alaska.
According to the government, domestic oil and gas production has increased every year since Obama's election in January 2009, with production currently at an eight-year high and foreign imports now representing less than half of the country's oil consumption, the lowest level since 1995.
Obama's contested five-year offshore plan, says the White House, opens up 75% of the estimated technically recoverable oil and gas resources in US waters, including all the most resource-rich areas on the Outer Continental Shelf.
"This plan was developed following extensive input from the public, industry, states, tribes, and others, and incorporates lessons learned from the Deepwater Horizon oil spill," the White House said last month.
Democrats have also pointed out that, according to a Department of the Interior report released in March 2012, more than 70% of the leases held by oil and gas companies in the Gulf of Mexico are undeveloped and lying idle. This has led many to argue that encouraging the industry to develop leases more quickly would be a better offshore strategy than aggressively opening new leases.
Republicans, Democrats and Big Oil: a war of words
The war of words between the Republicans and Democrats on offshore oil and gas extends to broader issues than just leasing legislation. The skirmishes come in the form of campaign speeches and media interviews, attack ads and counter-attack ads, and neither the candidates nor their spokespeople have been holding back.
In a May speech in Colorado, Romney attacked Obama's energy policies as a hindrance to US output, criticising the government's stance on hydraulic fracturing regulation and accusing his rival of taking too much credit for the industry's increased oil production under the current administration.
"The president tries to take credit for the fact that oil production is up," said Romney. "I'd like to take credit for the fact that when I was governor, the Red Sox won the World Series. But neither one of those would be the case. It was not the president's policies that led to oil production being up."
In the Republican candidate's position statement on energy, Romney criticises Obama for holding back the economy with overregulation and an unhealthy emphasis on renewable technologies. "In thrall to the environmentalist lobby and its dogmas, the President and the regulatory bodies under his control have taken measures to limit energy exploration and restrict development in ways that sap economic performance, curtail growth, and kill jobs," it reads.
Perhaps unsurprisingly given Romney's positive stance on oil exploration, major oil and gas trade group the American Petroleum Institute (API) has, without overtly supporting the Republican candidate, suggested that the government has been tying down the industry.
"We need a pro-growth president who promotes more than just 1% of our energy mix," said API president Jack Gerard, referring to Obama's support for wind energy.
The Deimos offshore field is 3,000ft deep in the Mississippi Canyon Blocks 762 and 806.
The Democrats' response has centred primarily on casting the Republicans, and Romney in particular, as puppets of Big Oil. Democrat Representative Ed Markey exemplified this sentiment when he criticised the Republicans' new offshore leasing plan.
"Whatever ExxonMobil wants, whatever Shell wants, whatever BP wants, we'll do it, even if we know millions of people will just be protesting right from the very beginning - and by the way, without passing one of the reforms from the BP spill commission to make sure that the drilling occurs in a safe fashion," Markey said.
A great deal of emphasis has also been placed on Romney's support for continuing to subsidise the oil and gas industry, a policy that Obama plans to phase out. Romney hasn't explicitly made his position clear on oil industry tax breaks, but he expressed his support of his running mate Paul Ryan's budget proposal, which maintains around $40bn in tax subsidies for Big Oil. In June, Romney's chief energy advisor Harold Hamm urged Congress to continue to provide tax breaks to the oil and gas industry.
The next three months leading to election day will undoubtedly see the energy debate intensify along with all the other issues being argued. It's clear that the oil and gas industry has a vested interest in a Romney victory, given his emphasis on streamlining offshore regulation and offering more leases. But with the Deepwater Horizon disaster still fresh in voters' memories, it remains to be seen if the American public will agree when the time comes to cast their vote.
Macondo Prospect, Gulf of Mexico, USA
Drilling over the Macondo prospect was initially planned to be carried out by Transocean's Marianas rig, but later changed to Deepwater Horizon. Deepwater Horizon caught fire when it was drilling at Macondo in April 2010.
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