Obama’s Oil Spill Speech Overreaches on Cap and Trade, Cancelled Drilling

Nicolas Loris /

A little over a month into the Gulf of Mexico oil spill, the American public wants answers– from the Obama administration, from Congress and from BP. While there are still many more questions than currently available answers, President Obama answered a few and dodged others in his speech today. He made a resounding push for clean energy legislation and referenced the House cap and trade bill passed last year and the one recently introduced in the Senate. He also suspended or canceled a number of lease sales off the coasts of American waters and extended a moratorium on deep-sea offshore oil drilling permits. The Gulf oil spill certainly presents an unprecedented economic and environmental disaster and challenge, but it should not be used as an excuse to ban offshore exploration and cancel leases outright or to overreach and make drilling prohibitively expensive. Furthermore, it should not be used to push clean energy agendas forward that will impose a significant burden on for American families, American businesses, and the American economy.

Similar to Rahm Emanuel’s “You don’t ever want a crisis to go to waste” statement, President Obama urged both Democrats and Republicans to move quickly to pass cap and trade legislation. This is not the solution to America’s energy needs because cap and trade will raise energy prices, kill jobs and contract the economy. If “clean energy” legislation moves forward, higher energy costs will spread throughout the economy as producers everywhere try to cover their higher production costs by raising their product prices, further impacting Americans. The result will be a much slower economy and lost jobs at a time when the top priority for Americans is economic growth.

Also adversely impacting America’s economic recovery and long-term energy policy in President Obama’s speech was his announcement to cancel or suspend lease sales in the Arctic, Atlantic and Western Gulf. “Domestic oil production is an important part of our overall energy needs,” President Obama said in his speech, but his announcements do not reflect that. There are billions of barrels of oil and trillions of cubic feet of natural gas under these waters that could possibly create tens of thousands of jobs as well as create revenues for financially strapped state governments and increase revenues for federal governments.

The leasing process takes multiple years to complete and does already provide rigorous environmental and regulatory checks. If the president was sincere in his statement about the need for oil production, he would allow these lease sales to continue. Don’t forget, President Obama’s announcement in favor of offshore drilling in March of this year, only opened up a small portion and actually terminated other lease sales.

It may, however, be a completely legitimate short-term policy to better analyze the technology on deep-sea offshore drilling; thus, temporarily halting the operation 33 exploratory deepwater rigs is a good decision – as long as the decision does not lead to unnecessarily delays. Figuring out why the blowout preventer and other failsafe mechanisms failed should still be of chief importance. As Heritage’s energy expert Ben Lieberman wrote, “As technology has advanced to allow exploration and drilling at great depths—in the case of Deepwater Horizon through 5,000 feet of water and 18,000 feet of sea floor—the challenge of dealing with spills under these conditions may have lagged.”

Was it a result of human error or did the depths of the water or lack of available technology play a role? President Obama highlighted the technological difficulties of drilling offshore, saying, “The fact that oil companies now have to go a mile underwater and then drill another three miles below that in order to hit oil tells us something about the direction of the oil industry. Extraction is more expensive, and it is going to be inherently more risky.” In a recent post, colleague David Kreutzer explains that not all the “easily accessible” oil is gone.

President Obama is right to focus on the environmental cleanup and holding BP accountable for the damage. He rightly said that BP and other oil industries, not the government, have the expertise in stopping the leak, which may be accomplished with the top-kill approach. The government finally approved Bobby Jindal’s request to build barrier islands, a man-made shield to protect Louisiana’s marshlands. The president said he is angry and frustrated – as are most Americans. But that frustration should not lead to policies that will shrink America’s economy, destroy jobs and affect America’s energy production for years to come.