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Drill Baby Drill
March 31, 2010
As an organization that works to reduce the size of government and lower the tax burden for citizens, we’ve looked into offshore drilling as a way for the government to raise revenue without raising taxes. Yesterday, the Obama administration proposed opening vast expanses of water along the Atlantic coastline, the eastern Gulf of Mexico, and the north coast of Alaska to oil and natural gas drilling. The proposal would end a longstanding moratorium on oil exploration along the East Coast from the northern tip of Delaware to the central coast of Florida. Under the plan, the coastline north of New Jersey would remain closed to oil and gas activity as well as the Pacific Coast. The proposal is intended to reduce dependence on oil imports and generate revenue from the sale of offshore leases.
Our country’s energy future deserves more than political gamesmanship and the Administration may be onto something here. In fact, California alone consumes more natural gas than all but a handful of countries, ranking tenth in worldwide consumption. We mandate the use of relatively clean natural gas for over half of our electricity generation and yet we severely restrict its production. We also pay the highest natural gas prices in the world!
Interestingly enough, the United States is the only country that bans ocean production of natural gas. Natural gas prices are based on local supply constraints much more than are oil prices. Development of more domestic sources will likely bring lower prices. This is an opportunity to use natural gas to help achieve our goals of reducing greenhouse gases and other emissions and promote energy self-sufficiency.
Additionally, states are also likely to claim rights to the revenues from oil and gas deposits within 3-12 miles of shore and to some portion of lease proceeds. Offshore drilling opens a new chapter in our nation’s search for a comprehensive energy policy and can provide states will the much-needed revenue in order to balance their budgets. Offshore drilling will create jobs and increase the energy supply without cost to the taxpayer. It will create revenues for financially strapped state government and increase revenues for federal governments. President Obama said in his State of the Union address that we should make tough decisions about offshore drilling- looks like a pretty easy decision to me.
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