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Arizona Daily Star: Bush decision on oil backed by industry

Arizona Daily Star

Bush decision on oil backed by industry

By John Porretto
Tucson, Arizona | Published: 07.15.2008
HOUSTON — The oil industry applauded President Bush’s announcement Monday that he would lift an executive ban on offshore drilling, even though no drilling will take place unless Congress lifts its own ban.
The American Petroleum Institute, the industry’s trade association, said opening new regions to oil companies would, among other things, boost supplies of oil and natural gas and create more well-paying jobs.
“We encourage Congress to pass a common-sense and effective long-term energy policy designed to increase conservation and energy efficiency,” said API spokeswoman Judy Penniman.
The U.S. has had two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by the first President Bush in 1990. The current president, trying to ease market tensions and boost supply, called last month for Congress to lift its prohibition before he did so himself.
Congressional Democrats, joined by some GOP lawmakers from coastal states, have opposed lifting the prohibition that has barred energy companies from waters along both the East and West coasts and in the eastern Gulf of Mexico.
“Lack of access to responsible production is a root cause of our continuing energy shortfall,” Shell Oil Co., the U.S. arm of European oil giant Royal Dutch Shell PLC, said in a statement. “As we have seen, limited supply and increased demand can lead to shortages and higher prices.”
Oil prices settled above $145 a barrel Monday after hitting a trading record of $147.27 a barrel on Friday before retreating somewhat. At the pump, the average price of regular gasoline at self-serve stations was about $4.11 late last week, according to a national survey. The average U.S. price is $1.05 higher than it was a year ago.
Still, environmental groups immediately criticized Bush’s decision. The Natural Resources Defense Council said the president’s “pro-big oil policies” already have left the U.S. more addicted to oil than ever.
“Americans deserve policies that free us from fossil fuels and give us better choices that will bring down our energy costs, make our air cleaner and help solve global warming,” said Jim Presswood, the NRDC’s energy advocate.
In a note Monday, FBR Research said while the president’s decision may put pressure on Congress and some governors to open more acreage to drilling, “it is not by itself sufficient to conquer a complex web of competing incentives.”
“Political football isn’t production,” the research firm said. “While lifting the moratorium will force opponents of offshore drilling to justify their stance, $145 (a barrel) oil does not guarantee action on off-limits areas.”
Bob Malone, president of BP PLC’s American operation, noted that one-fourth of U.S. oil production comes from the 15 percent of the Outer Continental Shelf not currently off limits.
“It’s time to open the rest,” Malone said. “Something good could happen, as it has in the deepwater Gulf of Mexico where oil production has increased 15-fold since government began encouraging exploration there twenty years ago.”
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