Oil and Gas

Bush lifts offshore drilling ban in symbolic move

WASHINGTON (Reuters) - President George W. Bush on Monday lifted a White House ban on offshore drilling to try to drive down soaring energy prices, a largely symbolic bid unlikely to have any short-term impact on high gasoline costs.

With prices at the pump over $4 a gallon, Bush pushed the Democratic-controlled Congress to expand offshore oil and natural gas drilling in the Outer Continental Shelf and give oil companies access to the Arctic Wildlife National Refuge.

High gasoline prices and soaring food prices have irked American consumers in a presidential election year, when Bush’s Republicans are trying to keep the White House and wrest control of Congress back from Democrats.

“Today, I’ve taken every step within my power to allow offshore exploration,” Bush told reporters. “This means the only thing standing between the American people and these vast oil resources is action from the U.S. Congress.”

Congress too has a ban on offshore drilling and while it expires on September 30, it could be renewed. Plus, federal officials say it would take years for any oil to be produced in those areas, together making Bush’s move largely symbolic.

“Now the ball is squarely in Congress’ court,” Bush said after signing a memorandum reversing a presidential ban that was instituted by his father, then-President George Bush, almost two decades ago. “The time for action is now.”

With an eye to the November election, Bush accused Democrats of having “done nothing” as gas prices have gone up and urged them to pass a law for “responsible offshore exploration” and to give states a say in the decisions.

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House Democratic Speaker Nancy Pelosi called Bush’s plan a “hoax,” joining a chorus of condemnations from environmental groups. The business-friendly U.S. Chamber of Commerce hailed the move as a step toward alleviating high gasoline prices.

Democratic White House hopeful Sen. Barack Obama’s campaign also criticized Bush’s move. “It would merely prolong the failed energy policies we have seen from Washington for 30 years,” spokesman Bill Burton said.

Even if more Democrats in Congress backed lifting the legislative ban, it would be unlikely that they would buck their presidential candidate ahead of the November election.

Republican White House contender Sen. John McCain, who reversed his previous opposition to offshore drilling, told reporters that he thought the decision was a “very important signal” and that “states should continue to decide.”


Despite the hurdles, stocks of offshore drilling companies rose, including Noble Corp. up 1.8 percent and Hercules Offshore Inc. up more than 4 percent. August light crude oil was up slightly to $145.20 a barrel in afternoon trading on the New York Mercantile Exchange.

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“Sooner or later, the American public will get so tired of high prices, that they will put pressure on politicians to make changes,” Larry Nichols, chief executive officer of Devon Energy Corp, an independent U.S. producer, told Reuters.

The U.S. Energy Department’s forecasting arm has said opening the Pacific, Atlantic and eastern Gulf of Mexico regions to drilling “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.”

Based on data more than 25 years old, the department estimates that drilling on closed federal tracts off the U.S. coasts could produce 18 billion barrels of oil and 76 trillion cubic feet of natural gas.

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Congress has blocked many attempts to allow updated surveys on the amount of oil and gas reserves in the banned areas.

If both the presidential and congressional bans were lifted, it would then be up to individual states to permit drilling off their shores, White House spokeswoman Dana Perino said. Florida’s Gov. Charlie Crist has expressed support for drilling while California’s Gov. Arnold Schwarzenegger reiterated his opposition.

Perino said the president initially wanted to move in concert with Congress but decided to go ahead alone after being rebuffed by Democratic leaders and because of a relentless upward rise in energy prices.

“There’s a lot of things that would need to be worked out,” she said. “And both the legislative ban and congressional ban need to be lifted in order for us to move forward to try to develop more sources here in our own country.”

Environmentalists said more drilling would not end U.S. dependence on oil or cut gasoline prices.

“Calls for more drilling will only increase the already record profits of big oil and will do little to reduce the costs of gas at the pump,” said Larry Schweiger president and chief executive officer of the National Wildlife Federation.

The presidential offshore drilling ban was instituted in 1990, was later extended by President Bill Clinton and was set to expire in June 2012. Most offshore drilling is allowed in the Gulf of Mexico, off the coasts of Texas, Louisiana, Mississippi and Alabama, but not Florida.

“The president cruelly is misleading Americans for attempted political gain,” said Sen. Bill Nelson, a Florida Democrat. “He knows ruining our coastlines won’t bring down gasoline prices nor solve our energy challenges.”

Additional reporting by Deborah Zabarenko and Thomas Ferraro in Washington, DC and Anna Driver in Houston; Editing by David Wiessler