Wednesday, June 18, 2008
Oil Geopolitics Part I: U.S. Reserves
A big political question now is whether or not to drill for oil in regions previously declared off limits by congress. John McCain has switched sides in the debate, now favoring drilling, while Barack Obama remains against drilling in prohibited spots.
The major prohibited regions are the West Coast, the Eastern Coast plus western Florida, and ANWAR. Both Republicans and Democrats from the coastal states prefer having the no-drilling zones because it protects the local environmental and helps out tourism. Most Alaskans on the other hand favor drilling in ANWAR because much of it is frozen tundra and only a portion of it is the beautiful part shown on television. They counter the environmental damage claims by showing how the Alaskan Oil pipeline has helped caribou rather than hurt it. Environmentalist claim drilling and having a pipeline are different.
The lack of new drilling zones has hampered U.S. domestic production. The amount of environment saved is debatable with foreign countries like Spain, China, and Cuba drilling in international waters nearby. Currently American oil policy is clearly helping competitor countries.
Right now Brazil is drilling in its new found off shore reserves. A different culture, one of government ownership and economic interests is propelling the drive. However, Brazil is also famous for its ethanol law mandating fuel integration. Brazil has found a balance needed to transition from purely oil to more sustainable resources while lessening the blow of oil withdrawal. The United States must learn this lesson too if it wishes to be more environmentally friendly and stop funding hostel (or nominally friendly) oil regimes.
America needs new drilling, new refineries (South Dakota is building the first one in thirty years!), along with new fuel technology to steam the rising price of energy. Putting most of the eggs in the oil basket is bad policy.
Next Post: Part II: The Rise of the State Oil Firm and the Downfall of the Multinational
Maps courtesy of Gateway Pundit