Driller Killer

I notice that President Obama has recently reversed himself on the issue of new offshore drilling for oil and natural gas in U.S. waters. Unless I am completely misremembering things, he was pretty much against this during the Presidential campaign. I suppose there are a few ways you can look at this. It would certainly not be impossible that the President has obtained new information or a greater understanding of the issue during his tenure in office, and has, therefore, revised his previous position. It is even possible that the factual circumstances have changed during the intervening period and that a new policy is truly warranted.

We should be cautious about being too critical of such deviations from campaign rhetoric since we do not want our political leadership to be reluctant to do what is best for the nation, no matter what kind of self-serving idiocy they spout during their pursuit of elective office. On the other hand, I am always concerned that sound policy positions may be abandoned for reasons of political expediency, whether to achieve legislative compromise or simply to placate ethereal public opinion. I am unsure as to the President’s motives with respect to this current issue, although it has been speculated that he is trying to reach a deal on Climate Change legislation and feels some concession to the oil and coal industries may be necessary. It has also been suggested that President Obama still has not completely abandoned the broader concept of bipartisan legislative initiatives and that he continues to offer these unilateral concessions to our Republican friends in order to facilitate future legislative success.

Assessments of the potential benefits of extraction of these coastal oil and natural gas reserves vary, and are largely dependent on the assumptions made with respect to the volumes to be extracted. However, there is no one suggesting that exploiting these reserves will significantly relieve our dependence on foreign oil sources or substantially affect retail gas prices. The consensus is that full development of all the coastal resources targeted by the President’s initiative would only reduce average gasoline prices by 3¢ per gallon by 2030. Currently we buy about 143 billion gallons of gasoline each year, so even if demand is unchanged in 2030, it would represent about an additional $4.5 billion in the pockets of American consumers each year. Just for comparison, the clean up cost of the Exxon Valdez oil spill is estimated to be approximately $2.1 billion, but the actual long-term cost of the associated environmental degradation and loss of genetic diversity is virtually impossible to quantify in financial terms. Proponents of offshore drilling note that the recent environmental record of seabed oil extraction is quite good and that the distance from shore of these potential reserves make environmental calamities like that which befell Prince William Sound very unlikely. It is also noted that there will be significant revenues generated for the various states involved, as well as for the Federal government, and thousands of jobs will be created.

Here in Florida, where the white sand and blue waters of the Gulf of Mexico are significant financial resources in their own right, there is some skepticism of the wisdom of opening up these coastal areas for further exploration and extraction. The State of Florida reports that beach related tourism supports almost 450,000 jobs in Florida and the total direct spending of beach visitors each year is almost $20 billion. Any significant harm to Florida’s beaches by ugly clumps of petroleum tar could negate many years of savings on gasoline resulting from new offshore drilling, even without trying to estimate the dollar cost of environmental degradation. It would therefore seem that whether additional offshore drilling is a good idea or not depends on the probabilistic model you use to forecast outcomes. In other words, all we can do is guess.

Speaking of guessing, I have a few other concerns about this policy change that are extremely difficult to address in quantitative terms. What does the exploration and development of new oil resources that will not be fully implementable for 15 to 20 years say about our commitment to evolve away from an oil-based energy economy, and is the Obama administration conceding that by 2030 we will be no closer to significantly implementing alternative energy sources than we are now? Could the investment necessary to locate and extract these oil and gas resources not be better spent to develop and refine alternatives like bio-fuels, hydrogen fuel cells and nuclear fusion? Shouldn’t we be building new bicycle factories?

I am still a President Obama supporter, and I still firmly believe we are better off with him than the alternative we were offered in 2008, but he is proving to be a mere mortal after all, and his inclination to compromise on important issues for political reasons does not really impress me as change you can believe in. It is more like change you can see a faint glimmer of, and you have to supply your own hope. I don’t know whether new offshore drilling is worth the risks or not, but I suspect neither does President Obama, and his willingness to support it, despite his previous pronouncements to the contrary, gives me a decidedly uncomfortable feeling of déjà vu.