Energy Policy

IER's Pyle discusses political impacts of administration's offshore drilling proposal

With the Obama administration recently proposing oil and gas drilling access off the East Coast, in the eastern Gulf of Mexico, and potentially off Alaska, has the administration shifted its views on energy policy? During today's OnPoint, Thomas Pyle, president of the Institute for Energy Research, discusses the policy move and explains why he believes the decision is a political calculation to gain votes for a climate bill.

Transcript

Monica Trauzzi: Welcome to the show. I'm Monica Trauzzi. Joining me today is Tom Pyle, president of the Institute for Energy Research. Tom, thanks for coming on the show.

Thomas Pyle: Thanks, Monica.

Monica Trauzzi: Tom, President Obama recently proposed allowing oil and gas drilling for the first time in the water off the East Coast, in the eastern Gulf of Mexico and possibly also off Alaska. And the move was applied it by many as a policy breakthrough, but you feel this is political theater and nothing else. What do you believe the Obama administration's strategy is here with this and what are they trying to achieve?

Thomas Pyle: Well, thanks for the question, before we begin though I'd like to express my condolences to the families in West Virginia who lost their lives in the tragic accident last week. America's miners work day in and day out to keep the lights on and we shouldn't forget those men. So, to the question, my grandfather told me when I was growing up not to judge a man by his words, but by his deeds and if you look at this announcement what the president actually did was take the entire OCS, which was open as a result of the 2008 congressional Democrats lifting the moratorium along with President Bush, and essentially closed up huge swaths of it, the West Coast for example. He delayed or canceled five leases in Alaska that government estimates show would have yielded approximately 77 billion barrels of oil. In addition to that, he kicked the can down the road for a year with respect to the Virginia lease, delayed it for another year and merely studied the areas that he actually opened up. So we really didn't gain anything with respect to this issue, when, in fact, the overwhelming majority of the public, 72 percent in the last poll, support this issue. So, he gave platitudes to the issue, expressed the issue in terms of how it would create jobs and we agree with him on that; but, unfortunately, his Department of Interior took us backwards.

Monica Trauzzi: But is this administration sort of trying to find a middle ground where they're addressing climate change, but also keeping up with our energy needs and is this a fair middle ground to take?

Thomas Pyle: Not really, I mean what this was designed, in my opinion, to do is to give Senator Graham and Kerry, who are the lead proponents of the most recent effort to impose cap and trade, kind of the political cover to try and search for some extra votes amongst the sort of middle-of-the-roaders or the folks who haven't really come out for or against. He did this also with the nuclear announcement a couple weeks back. He announced loan guarantees for production of nuclear in Georgia, but his own budget a week earlier basically shut down the nuclear waste repository issue by zeroing out the budget for it. So, what we see in this is two orchestrated efforts to sort of create an air of political possibility for cap and trade in the next couple of months.

Monica Trauzzi: But in terms of the KGL bill, I mean does it really have an impact on the votes? Is this enough to actually sway senators?

Thomas Pyle: That's a good question, we'll see. You know, there's really a lot of issues that haven't been answered even with this announcement. What will the senators do on revenue sharing, for example, which is a huge incentive for states who would be otherwise participating in the program? And the senator from New Mexico, Chairman Bingaman, has already indicated he's against revenue-sharing. So, in order for the votes to materialize for an aggressive offshore exploration in production they would have take large steps, congressional steps, and I just don't know if the votes are there for that.

Monica Trauzzi: And are there certain votes that could potentially be lost as a result of this policy?

Thomas Pyle: Absolutely. The further they go giving a nod to the Senator Murkowskis of the world, they run the risk of losing the Senator Browns of the world, so it's a delicate balance. But the president, you've got to applaud him, I mean he's very good, very well spoken as we know and he has what he thinks given Senator Graham, who's been working hard on this for several months, the political cover to try and ram a cap-and-trade bill through.

Monica Trauzzi: Why not announce this a bit later once the bill has actually been seen and looked at and it's being debated? I mean wouldn't that be a better negotiating tactic to put it on the table at that point?

Thomas Pyle: Actually probably not I think, because then it would be seen for what it is, which is pretty much political cover. I think if you do it now, let it linger out there, you get the good news story out of it and kind of let it hang out there for a bit. It gives him the ability to come back later and say, see, this is an example of all these different interests coming together. But you really, again, have to look at what this Department of Interior has done over the past year. Right away, as soon as he was inaugurated, they canceled onshore leases in Utah for example. They have studied this issue yet again by having public hearings in several states, so the actions that they've taken on offshore drilling are in direct contrast to the words that President Obama gave us the other day in front of that fighter jet.

Monica Trauzzi: But ultimately, when we're talking about climate change and the impacts of oil use on climate change, shouldn't we be scaling back on our use of oil and also drilling because that will ultimately produce emissions?

Thomas Pyle: Well, oil, coal, and natural gas are 85 percent of our energy needs and that's a fact and it will remain a fact for a very long time. We are the only developed nation in the world that has for years and years and years, both Republican and Democrat administrations and Congresses, deliberately restricted access to our own offshore energy. We know that it can be done in a safe and environmentally responsible manner. We've seen it. In addition, other countries, such as Brazil for example, are borrowing money from the United States to drill off of their coast in Rio. So, we can't, even if we wanted to…and even the EIA says this, for a very long time these are going to be the mainstays of our energy supply. And with respect to these other sources, there's room for all forms of energy, but if you look at the facts you see that these types of energy have been around for a long time. They're not infant energy sources and they only exist with the subsidies and we've seen in other countries when the subsidies go away so too does that industry.

Monica Trauzzi: Let's talk about the impact on the public. Is this an effective strategy of sort of swaying the public, getting them onboard with possibly a cap and trade and seeing some numbers register at the poll?

Thomas Pyle: I think initially the media projected this as sort of a positive step, but as the days have gone on and we've seen sort of what the actual policy does, more and more people are attuned to the fact that they really didn't get much for it. What I think is going to happen is the more people learn that no matter what you call this bill, cap and trade, pricing carbon, a carbon tax, a gas tax, it's still the same thing. We're still basically asking American consumers to pay more for their energy and I think they won't support that at the end of the day.

Monica Trauzzi: OK, we're going to end it there. Thank you for coming on the show.

Thomas Pyle: Thank you.

Monica Trauzzi: And thanks for watching. We'll see back here tomorrow.

[End of Audio]

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