Deepwater Commission’s Inevitable but Damaging Conclusion

Deepwater Commission’s Inevitable but Damaging Conclusion

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Eco-warriors across the country are no doubt cheering release of the report from the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. Composed mainly of environmentalists, the commission naturally concluded that the way to safeguard the country against more such disasters is to throw up significant new regulatory obstacles to offshore drilling.

Consider the composition of the commission: Sen. Bob Graham (D-Fla.); William K. Reilly, former administrator of the EPA; Frances Beinecke, president of the Natural Resources Defense Council; Donald Boesch, president of the University of Maryland Center for Environmental Science; Terry Garcia of the National Geographic Society; Cherry Murray of Harvard’s Engineering School and Frances Ulmer, chancellor of the University of Alaska Anchorage. Doubtless all these folks know their environmental ABCs backwards and forwards, but are they likely to view offshore drilling as anything but a threat to our country?

Although they did hear from BP’s vice president of North American operations, a review of the agendas of their meetings and panels indicates much more time was spent on the impact of the spill on the environment and local businesses. While these topics are important, they don’t really get at how to make offshore drilling safer- but that was perhaps not the point. The outcome, it is fair to say, was a foregone conclusion -- more regulation and more oversight.

That will cost money and is unlikely to be approved by the newly budget-conscious Congress. Therefore, the Obama administration – no friend to the oil industry – will be in an excellent position to squash further exploration of our important deepwater energy resources. They can argue that without the recommended safeguards further drilling is unsafe, burnishing their green credentials in the run-up to the 2012 election.

What a happy outcome for all involved, except of course for the American people.

Over the past year, the U.S. has been spending between $25 and $30 billion each month on imported oil. In November, we imported 327 million barrels of oil – 57 percent of our total consumption -- at a cost of $28 billion. Our balance of payments accounts stagger under these outlays, which prop up global oil prices and continue to leave our economy vulnerable to unpredictable gyrations in energy costs.

Reliance on imported oil first became a substantial threat to the U.S. in the 1970s, when OPEC put through sizeable price hikes; in the intervening decades we have done almost nothing to wean ourselves from foreign oil. Not that such a program would be easy- it would not. However, with a commitment to increasing all sources of domestic energy, for putting to broader use our abundant supplies of natural gas, for reigniting the development of nuclear power and for helping to make sensible alternatives economically viable, we could indeed make a dent.

We need to explore and develop our domestic oil reserves. Unfortunately, easy-to-find and low-cost onshore reservoirs in the lower 48 states are already being tapped. Most of the fields in shallow waters offshore are well known and in production. While technology has led the oil industry into deeper waters and deeper reservoirs, we have seen that measures taken to protect our environment were inadequate. Oil companies are currently working hard to correct the shortcomings that contributed to the Deepwater disaster. Going forward, it will not be regulations that make drilling offshore safer -- it will be the self-interest of the oil companies, who desperately need “secure” supplies.

If there is another major supply disruption, for instance in the Middle East, the national security implications of our current import requirements will become all too visible. To satisfy those skeptical about offshore drilling, by all means beef up oversight, but not to the point of putting substantial oil reserves off limits. Don’t let our domestic energy agenda be torched by 2012 election needs. That would be the real disaster.

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After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for, The New York Sun and Women on the Web.