President Obama proposed plans today to open areas along the coasts of Virginia, the Carolinas, Georgia and northern Alaska for offshore oil and gas exploration.
This follows the president’s step to restart the nuclear power industry by making $8 billion in loans available for a plant in Georgia. Also today, the president said he wants to double the size of the federal fleet of hybrid vehicles, and federal funds have been allotted for a range of alternative energy projects.
Diverse sources of energy are important, but the administration also recognizes reality – that oil and gas will be the foundation of U.S. energy demand for many years to come, and for that reason, we have to boldly seek out new sources of domestic supply.
Offshore drilling has been banned since 1981 for most of the U.S. coastline, but it seems that’s where the deposits are. The outer continental shelf (mostly Gulf of Mexico) now accounts for nearly 30 percent of U.S. oil production, up from 11 percent in 1990.
Today’s announcement will elate those who have been pushing for more offshore production, but it’s important to remember that any drilling in these waters would not begin for years.
The impact may be felt sooner in certain segments of the oil and gas sector. Jack-up drill rigs and offshore platforms — in high demand and short supply less than 18 months ago — may see renewed demand. In addition, new pipelines and other infrastructure would be needed to make production in these new areas economically feasible.