John McCain is finally starting to exploit Barack Obama’s weakness on the energy issue. With gasoline topping $4 per gallon, McCain reversed his stance on offshore drilling and called for Congress to lift a 27-year-old moratorium on coastal energy exploration. With this shift, McCain has put himself on the same side as two-thirds of the American people, according to a recent poll. Obama, meanwhile, has said that he “would have preferred a gradual adjustment” toward $4 per gallon gasoline, but otherwise he seems amenable to it — as we would be, if that $4 price reflected market conditions instead of government restriction of the energy supply.
Lifting the ban on offshore drilling won’t increase supply right away, but would signal to oil speculators that the U.S. is serious about increasing domestic production, long smothered under regulatory and tax practices that discourage exploration and the expansion of our refining capacity. That could immediately put downward pressure on the price of oil and alone would do more to reduce the price at the pump than anything Barack Obama has proposed. But McCain should go even further.
He remains opposed to drilling in a miniscule section of the Alaskan National Wildlife Reserve (ANWR), and so far he hasn’t said anything about oil shale, a type of oil-producing rock found in abundance on federal lands in the Western U.S. Although the price of traditional crude will have to rise even more before shale becomes a viable alternative, it is worth considering given the trajectory of the market. On this, McCain should look to President Bush, who gave a speech Wednesday calling on Congress to lift the offshore drilling ban, reiterated his longstanding support for drilling in ANWR, and asked Congress to repeal a ban on oil-shale leasing on federal lands.
The U.S. Minerals Management Service estimates that drilling offshore could produce as much as 86 billion barrels of oil. Drilling in ANWR — which would only affect approximately 2,000 of its 19 million acres — could supply 5 percent of America’s oil each year for 12 years before it starts to decline, according to Energy Department estimates. And though there are barriers to their exploitation, oil-shale deposits in the Western U.S. could yield up to 800 billion barrels — three times the proven reserves of Saudi Arabia.
To his credit, McCain has been touting nuclear power, and wants to streamline the permitting process for new plants. But he continues to plug for “energy independence” as if it’s a revolutionary policy, when it has been a standard Washington promise since the Nixon administration and remains a chimera. He foolishly talks of wind, solar, and tide as if they are viable near-term substitutes for fossil fuels. And he feels compelled to condemn the “obscene” profits of the oil and gas industry, as if it were responsible for the increased prices — set by a global market — for its products.
McCain should realize that anti-business demagoguery is a Democrat’s game. Indeed, the most ambitious energy proposal we’ve seen from Obama so far is a punitive new tax on oil companies, intended to produce pain rather than revenue. In reality, a “windfall” profits tax would function as a tax on investors in oil companies, including many pension plans and retirement funds. The Congressional Research Service found that the last time Congress imposed such a tax, it reduced domestic production by discouraging investment in oil companies. It also puts the government in the business of deciding what profits are acceptable, which is itself unacceptable.
Americans favor increasing — not reducing, or making more expensive — energy production. We’re glad McCain has taken a step in that direction.