It is clear that gasoline prices will be a major issue in this year's presidential race.
The battle lines are also clearly drawn: Republicans (backed by industry voices such as the American Petroleum Institute) say the key to lowering pump prices is to increase domestic production. They blast President Barack Obama for "closing" offshore and onshore federal lands to drilling.
Democrats say it's not that simple. Gasoline prices are tied to oil prices, which are set globally and react to more complex factors such as Iranian saber rattling and the growing demand in places like China.
There is ample room for genuine debate, of course.
Obama seemed poised to approve TransCanada's plan to extend the Keystone KL pipeline until environmental groups ramped up their protests. The decision to delay a decision on Keystone until 2013 left Obama open to charges that he acted politically to shore up support on the left.
And while there are real difficulties with holding a lease sale off the coast of Virginia (the lack of a revenue sharing deal with the states, the military's need to conduct exercises, to name two), it would have cost the administration nothing to have included a Virginia sale late in the proposed 2012-2017 offshore leasing plan. Delaying a Virginia sale for five years just feeds criticism that Obama wants to limit drilling.
And the six-month deepwater drilling moratorium, plus a three-month de facto moratorium imposed in the wake of the April, 2010 Deepwater Horizon disaster, plus the growing pains associated with new safety rules, made for a much slower recovery in the Gulf of Mexico than the government had hoped for.
But it seems prudent, before facts fall victim to rhetoric, to catalog the steps Obama has taken to expand domestic energy production.
- Western Gulf of Mexico lease sale. In December, the government sold leases for more than one million acres offshore Texas for $338 million in high bids.
- Central Gulf lease sale. Scheduled for June, this combined lease sale, delayed because of Deepwater Horizon, will offer 38 million acres for lease in areas of great promise. In the past week, both Shell and Anadarko have announced the discovery of new reservoirs in this area.
- Settlement of BP Julia lawsuit. The former Minerals Management Service initially denied a request by BP and its partner Statoil to extend it leases in the promising Julia find. BP sued and the two parties settled in January. The terms provide the government tens of millions of dollars in royalties it otherwise wouldn't have received and requires production by 2016. The companies have estimated that the Julia project could produce more than 175 million barrels of oil through six production wells.
- NPRA lease sale. In December, the US sold leases for 142,000 acres in the National Petroleum Reserve-Alaska. The sale raised $3.6 million in bids.
- ConocoPhillips NPR-A permit. In December, Interior Department Deputy Secretary David Hayes helped break the logjam that had prevented ConocoPhillips from drilling on its leases along the Colville River in Alaska. It was the first success of the Obama-appointed interagency working group on Alaska energy development.
- Shell Alaska drilling. The interagency working group's second success came this month when the Bureau of Safety and Environmental Enforcement approved Shell's oil spill response plan for its planned exploration in Alaska's Chukchi Sea this summer. In both cases, exploration that had been stalled for years is now more likely than ever to proceed.
- Mexico transboundary treaty. The US and Mexico this month signed a transboundary treaty that provides for cooperation between the countries on drilling safety standards and ways to agree on assigning royalties for oil and gas produced from reservoirs that straddle the maritime border. The agreement makes 1.5 million acres of the US Outer Continental Shelf more accessible.
Leave a comment