U.S. Banks On Black Gold

President Obama’s plans to open a huge section of East Coast waters and other protected areas in Alaska and the Gulf of Mexico has fueled a politically explosive debate over the hunt for more domestic production of oil and gas.

The president’s initiative, which would reverse 20 years of federal policy, allows exploration from Delaware to central Florida as well as the northern waters of Alaska, according to the Associated Press. Drilling could begin 50 miles off the coast of Virginia by 2012. Obama also has proposed that Congress lift a drilling ban in the oil-rich eastern Gulf of Mexico, only 125 miles from pristine Florida beaches. The entire Pacific seaboard will still be untapped as well as Alaska’s Bristol Bay area. Conservationists have defined these areas as national treasures for wildlife.

We believe this recent decision will have far-reaching economic and national security implications for the United States. The outcome will affect where and how U.S. consumers purchase oil for an ever-increasing oil-dependent nation.

While some think Obama is trying to divert attention away from the recent health care reform controversy, others believe his aggressive and somewhat practical policies are necessary.

Obama’s exploration announcement, coupled with his push to provide cleaner energy and efficient cars, is seen by some as a way to help stimulate the U.S. economy and create jobs. At a news conference last week, the president said “that the answer is not drilling everywhere all the time. But the answer is not, also, for us to ignore the fact”.

Some Washington insiders view Obama’s decision as a ploy to win Republican support for a comprehensive climate change bill. They suggest that if the Democratic president is to propel the renewable energy industry forward, he knows he will need support to limit carbon emissions.

On the other side, environmentalists are criticizing Obama and comparing him to GOP vice presidential nominee Sarah Palin, whose call for changes in the nation's energy policy at the 2008 Republican National Convention raised chants of “drill, baby, drill!” Urging more nuclear plants and increased drilling, warning about the threat of an Iran or terrorists holding U.S. energy supplies hostage, the former Alaska governor, as noted by the Los Angeles Times, said: "We Americans need to produce more of our own oil and gas. And take it from a gal who knows the North Slope of Alaska: We've got lots of both."

It comes as no surprise that Obama’s policy is drawing fire between environmentalists and oil industry supporters. For example, the conversation group Oceana declared that the president is “unleashing a wholesale assault on the oceans.” Oceana, founded in 2001, calls itself the largest international organization focused solely on ocean conservation.

America will increase oil production of 5.31 million barrels of crude per day to 6.13 million barrels of crude per day over the next 10 years, according to the U.S. Energy Information Administration. This represents an increase of 820,000 barrels per day through this period. The EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment.

It’s clear we need to step up domestic production from a consumption standpoint. But it’s also apparent the president has a political agenda; he’s trying to show the opposition party that he is willing to compromise with the GOP in some areas. He has already done so in nuclear energy, but winning a broad environmental and energy bill likely will be daunting.

Some Republicans see this initiative as a positive sign, but others argue that too many exploratory areas are off limits.
Senate Republican leader Mitch McConnell of Kentucky, calling Obama’s initiative a step in the right direction, questioned whether the administration would actually open new areas for oil production.

Access to oil and gas in the South Atlantic waters likely will meet stiff resistance unless Congress enacts a plan to share the billions of dollars in potential revenue from the lease sales and oil and gas development. Other senators argue that proceeds from oil and gas resources should be paid to the U.S. Treasury Department.

Obama also said he will release new requirements mandating automakers build more fuel-efficient cars and trucks. The standards include first-ever rules on vehicle gas emissions since they have been blamed for boosting carbon dioxide levels. As usual, it’s easy to see the president’s measures will affect individual industries with varying degrees. For instance, what may be negative for the automakers in the United States may prove to be a boon for oil companies and “green” start-ups vying for untapped business.

We believe that anything we can do as a nation to become more independent is in our best interest. This will force our country to develop necessary renewable energy resources while minimizing terrorist threats to our economic system.

This post is courtesy of TechMan who reports on trends, issues and ideas across industry, business and technology.