Stop Playing Politics With Energy

It's time to rethink California's prohibition against offshore drilling

With gas prices over $3 a gallon and natural gas prices soaring because of Hurricane season, Congress is once again trying to look like it’s doing something to lower gas and oil prices.

The Senate just approved a bill that would lift the 25-year moratorium on offshore oil and gas drilling in 8.3 million acres of waters off of Florida in the Gulf of Mexico. A House bill passed earlier this year would go much further by ending the federal ban on drilling in coastal areas.

Neither bill would change California’s long-standing bipartisan prohibition of expanded offshore drilling, but Gov. Schwarzenegger has come out forcefully against the federal maneuvering anyway. As we near November’s election, Arnold is out to put as much distance as possible between him and the unpopular Bush administration, recently publicly deviating from Republicans on oil drilling, stem cell research, California’s national forests, and global warming.

In this case, Schwarzenegger can take his cue from opinion polls, which show a majority of Californians strongly oppose offshore drilling, and a whopping 90 percent of likely voters rank environmental policy as important. Seventy percent rank the coastal environment as very important to quality of life in the state.

But the state’s energy future issue deserves more than political gamesmanship and believe it or not, Congress may actually be onto something here.

California’s offshore oil and gas resources are thought to be relatively small, but our demand is undeniably large. Worldwide, California consumes more natural gas than all but a handful of countries, ranking tenth in worldwide consumption. And Gov. Schwarzenegger’s proposed “Hydrogen Highway” would rely extensively on natural gas, increasing the state’s needs.

Further complicating matters, California ‘s policy on natural gas looks more like a split-personality disorder than an environmentally sound energy strategy. We mandate the use of relatively clean natural gas for more than half of our electricity generation, but we severely restrict its production. We also pay the highest natural gas prices in the world.

The US is the only country that bans ocean production of natural gas. Natural gas prices are based on local supply constraints to a much greater degree than oil prices are, and development of more domestic sources would likely bring real benefits in terms of lower prices.

It has been nearly 40 years since negligence in operations by Union Oil Company, which would have been illegal under California law even at that time, caused the tragic oil spill off the coast of Santa Barbara, damaging miles of beach and galvanizing public opinion against offshore drilling.

It is right that we remember this preventable failure, but it is irresponsible not to view it in light of modern knowledge. Oil and gas exploration off our shore can benefit from California’s advanced technological capabilities and strict environmental oversight.

In the last couple of decades, oil drilling operations in California’s state waters have had significantly better safety records than oil drilling rigs located in federal waters farther out or than oil tanker operations, where regulatory oversight is often either lax or inconsistent. For perspective, since 1969, rigs in California waters have spilled fewer total barrels of oil than what bubbles up from natural oil seeps in the Santa Barbara area in one week.

As for today’s technology, natural gas platforms in the Gulf of Mexico were strong enough to largely survive the devastating combination of Hurricanes Katrina and Rita last summer, suffering only minor damage and temporary production disruptions.

California’s coastline is undoubtedly best protected by Californian control of offshore oil and gas resources. Politicians and environmentalists should learn from the approximately one-quarter of federal wildlife refuges that have supported oil and gas operations as well as successful offshore operations in California, Canada and Europe to set clear environmental performance goals, and task industry with innovating to meet those standards.

If we are going to embrace the role of natural gas to help achieve our goals of reducing greenhouse gases and other emissions, promote energy self-sufficiency and reduce our dependence on foreign oil, then the state must make an honest assessment of our deep ocean energy resources. How much natural gas is out there? What are the benefits and trade-offs of using it? Otherwise, simply playing politics will lead to another environmental tragedy: an energy policy based on willful ignorance.

Skaidra Smith-Heisters is an environmental policy analyst at Reason Foundation, a free market think tank. An archive of her work is here. Reason’s California-related research and commentary is here and Reason’s energy research and commentary is here.