In his weekly address to the nation, President Barack Obama announced new measures to speed up domestic oil and gas production.
His orders come at a time when gasoline prices are rising above the $4 mark, and the House majority has been pushing for increased production with a series of bills designed to speed the process.
“These spikes in gas prices are often temporary, and while there are no quick fixes to the problem, there are a few steps we should take that make good sense,” the president told Americans.
“Without a doubt, one of the biggest burdens over the last few months has been the price of gasoline,” said Obama.
The Department of the Interior has been asked to conduct annual lease sales in Alaska, to speed up the evaluation of oil and gas resources in the mid and south Atlantic, and to create new incentives for industry to develop their unused leases.
The administration has frequently cited unused leases as a cause of the slowdown in oil production, but industry claims the slowdown is due to lagging safety and environmental inspections on the part of Interior.
The BP oil spill in the Gulf of Mexico in 2010 led to a drilling moratorium and a review of the industry’s regulatory oversight. Studies found that regulations and oversight were greatly lacking. Since then an overhaul of the regulatory agency has been underway, with industry support and involvement.
Once approved, it typically takes three to seven years before a lease yields a producing well. While U.S. oil production is currently at its highest in twenty-five years, industry is warning of a drop off of about 25 percent as early as next year.
During his address, Obama ordered leases that were impacted by the Gulf moratorium to be extended, so as to give more time for companies to meet new and higher health and safety standards created to prevent further disasters from happening.
With record oil prices driving up gasoline prices, the American public is eager to reduce the country’s reliance on imported oil. A recent CNN poll showed nearly seven in ten Americans either strongly favor or mildly favor increased domestic oil and natural gas drilling.
The president has been balancing concerns over how to make drilling safer, with the perception or concern on the part of the public that he could be holding up drilling and thus contributing to rising gasoline prices.
Experts, though, generally agree that the U.S. share of the global market is too small to affect gasoline prices.
“Increased domestic supply is generally a good thing. It can help to produce domestic jobs, and it can help reduce our trade deficit on oil. That being said, its effect on prices is very small,” said Paul Bledsoe, senior advisor with the Bipartisan Policy Center’s National Commission on Energy Policy.
The United States is the third largest producer of oil in the world, after Saudi Arabia and top producer, Russia. The U.S. is not an oil exporting nation though, keeping all domestic production for its own use.
When the price of oil is high it also creates a strong incentive for industry to drill more. Recent earnings reports have shown that the top U.S. oil and gas companies have raked in record profits—about $4 billion a week according the Obama’s address.
Obama and Senate democrats are taking aim at the profits of the top five oil and gas companies, suggesting that a tax provision available to all American manufacturing companies be taken away to the tune of $4 billion per year.
“The American people shouldn’t be subsidizing oil companies at a time when they’re making near-record profits,” Obama said.
The idea of singling out oil and gas companies in this way is punitive and unfair, said president and CEO of the American Petroleum Institute, Jack Gerard, in a recent interview with C-Span Newsmakers.
Lawmakers will vote next week on the issue, and Obama is encouraging Republicans and Democrats to “come together and get this done.”
There is a tendency for the American public to single out the oil and gas companies for high gasoline prices, said David M. Konisky, professor with the Georgetown Public Policy Institute.
“People very much want to blame the big companies for the gas prices,” Konisky said.
Obama concluded his address by reaffirming his commitment to investing in clean energy technologies, such as solar and wind power solutions, calling renewable sources of energy “the ultimate solution to high-gas prices.”
Friends Read Free