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Asian Tribune is published by World Institute For Asian Studies|Powered by WIAS Vol. 12 No. 2909

Offshore Drilling

By Tushar Charan - Syndicate Features

President George W. Bush wants to see the US lift the ‘outdated and counter-productive’ restrictions on offshore drilling, imposed since early 1980s ostensibly to protect US tourism and prevent environmental damage from possible oil spills. Ironically, his father, the senior Bush, had introduced a moratorium on coastal oil exploitation though he had restricted the ban to the western and central Gulf of Mexico region.

Bush Junior apparently believes, as do many others in his Republican party, that the uncontrollable surge in oil prices coupled with the need to curb oil imports that come mainly from ‘unstable’ regions have left the US, already facing prospects of a recession, no choice but to start exploiting its own sources of oil and gas reserves. There are also many Americans, including the Democrats and its nominee for the Presidential hopeful Barack Obama, who strongly disagree with Bush and his reasoning.

So far America’s offshore drilling has been confined to the Gulf of Mexico region while keeping nearly 80 percent of the country’s coastline and its outer continental shelf off limits in the search for oil and gas. The offshore drilling issue may figure prominently during the Presidential campaign in the US with the Republicans and the Democrats taking opposing views on the matter.

The debate will be of interest to India. Because its efforts at offshore drilling may be affected by what the US eventually decides. India has often lived with the problem of shortage of rigs and the consequent rise in its prices because of demands from other countries, including the US. In 2007 when the world as a whole saw an increase in the number of oil rigs in use go up, India was forced to live with a decline in the numbers. Market sources had said that Indian companies had to pay record prices for the rigs, with hiring costs jumping by 300 percent. Some companies had to postpone operations because of shortage of oil rigs.

Offshore drilling in fresh areas also spurts demand for other equipment, drilling ships and helicopters. The US is said to have a shortage of ships for offshore drilling. It is not unusual to hear drilling ships being booked five years in advance.

It is neither fair nor proper to presume that the opposition at home to the offshore drilling from politicians and environmentalists rules out the chances of the US deciding in its favour. Obama has said that the Bush proposal will in no way ease the present oil crisis that has seen prices soar well above the $135 a barrel mark and an almost certainty about continuous further price rise.

Even if the drilling process starts today no tangible results by way of higher domestic crude output and its impact on oil price will be available for at least another five years. Some energy experts have taken an even less optimistic view, saying it would take at least 10 years before the US consumer gets any benefit from extensive offshore drilling that pumps in more domestic oil and gas.

There is also the view within the US (which applies to almost all countries that depend on imported oil) that the need of the hour is to turn away from the use of fossil fuels if greenhouse gas emissions are to be drastically reduced. The contrary view is that despite all the talk about alternative energy sources there is little chance of oil being effectively replaced in the near future. And in the meanwhile, the demand for oil would keep growing with a significant but somewhat dubious contribution coming from two countries, India and China, if their economies have to maintain a high growth rate. The US demand for oil too is unlikely to shrink substantially even though more Americans may be buying ‘smaller’ cars than the gas-guzzling huge cars and preferring public transport to their own vehicle to commute to place of work and leisure.

The potential for finding more oil and gas within the US exists – on shore also. More modern exploration techniques can help discover viable reserves and reduce chances of environmental damages. Champions of off-shore drilling are not giving up their plank dubbing fears of oil spill as misplaced since ‘the offshore drilling already in process for long has not caused any major problem of oil spill’.

A recent US government study has found that there is a 33 to 51 percent chance of a major oil spill in the lifetime of an offshore oil and gas lease in a place like Alaska, considered one of the more promising areas for exploitation. A major spill is like the release of 1000 barrels of crude from a platform or a pipeline into the water. It can cause severe damage to the wildlife, including whales and polar bears.

Democrats who have opposed the demand for lifting restrictions on offshore drilling in the US have accused the Republican contender for the White House, Sen John McCain, of doing a U-turn on the issue. He said that he revised his views because of the high oil prices. The US, he maintains, has high energy reserves which need to be exploited with the help of cleaner methods available with new technologies. He said: ‘We must take control over our own energy future and become once again the master of our future.’

What Senator John McCain says appeals to a lot of ordinary Americans. It should not come as a surprise if Obama and the Democrats who have opposed McCain’s current view on offshore drilling, calling them ‘political posturing’, eventually may roll back their opposition, if, as is likely, the demand for fossil fuels continue to thrive.

India should not be caught napping with more difficulties in exploiting its own offshore oil and gas.

- Syndicate Features -

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