Obama's Drilling Plans Increase US Dependence on Foreign Energy
Obama's Drilling Plans Increase US Dependence on Foreign Energy (Part 1)
President Obama's new offshore drilling plan, which opens up some new areas off the US coast for future oil and gas exploration, was heralded as a breakthrough in America’s mission to end its dependence on foreign oil.
However, as experts sift through the particulars of Obama’s pronouncement, they are concluding that Obama’s new policies will actually make it more difficult for America to solve its ongoing energy dilemma. In effect, the President has restricted drillers’ access to the most fertile oil repositories which are located in the Arctic region. In fact, according to Rep. Trent Franks, Arizona Republican, the new policy ”closes more offshore drilling sites than it opens.”
On April 1 the President opened some areas off the coast of the southern Atlantic seaboard and in the Gulf of Mexico for possible future drilling. However, he simultaneously cancelled or postponed five potential lease sales in Alaska's oil-rich Chukchi and Beaufort seas off its northern shore. With a stroke of the pen Obama put on indefinite hold a good portion of oil exploration in the one area guaranteed to dramatically lessen our dependence on foreign oil and natural gas.
According to a 2008 US Geological survey report, the area north of the Arctic circle holds1.6 quadrillion ( 1600 trillion) cubic feet of undiscovered gas, or 30% of the world's supply. It also holds 83 billion barrels of undiscovered oil, 13% of the world's total. According to some estimates, the oil in America’s piece of this Arctic treasure, the Beaufort and Chukchi Seas, is equal to more than 16 years worth of imports from OPEC.
By comparison, the eastern Gulf of Mexico areas Obama just approved for drilling contain a relatively paltry 3 billion economically recoverable barrels. Moreover, experts are already questioning whether the other area mentioned in the announcement, off thecoast of Virginia, holds even 2 billion recoverable barrels.
The decision to declare Alaska’s northern waters off-limits to oil exploration could not have come at a worse time for an American economy desperately trying to crawl out of the Great Recession. Since 1973, every sudden spike in the price of oil has been followed by either a moderate economic downturn or severe recession. It is not hard to see the connection. A rise in energy prices makes just about everything else more expensive. Consumers forced to pay more for energy reduce their purchases of other items such as cars, clothing, vacations, and entertainment. Businesses suffer, workers are laid off.
The 2007 oil price spike to $150 a barrel was one of the major causes of the current downturn, the worst recession since the Great Depression of the 1930s. The International Energy Agency announced this week that rising oil prices are again poised to wreak global economic havoc. In spite of such warnings, the Obama administration has decided against aggressively expanding the US energy supply which might help keep a lid on the price of oil.
Part 2 of this article looks at the administration’s reasoning behind its decision to cancel the drilling leases in Alaska, and examines the political and economic ramifications of Obama’s evolving oil policy.
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