Thompson: Drill now in the Gulf

Review and comment

Drill now in the Gulf

A chief reason for high oil prices is capped supply in the U.S. We on the Gulf Coast can help.

by Rod Thompson, Executive Editor

Amazing what a little reality rain can do to a self-indulgent party.

One day Sen. John McCain, Gov. Charlie Crist and Sen. Mel Martinez wholeheartedly opposed drilling in the Gulf of Mexico anywhere in the direction of Florida, even hundreds of miles out.

But when gasoline at the pump topped $4 and American consumers became ready to revolt, the little party to protect Florida from anything to do with platforms and oil drilling has been duly crashed.

The three above-mentioned politicians, in that order, have flipped to seeing the obvious need for drilling in the oil-rich Gulf of Mexico.

It's now time for a lot more Florida leaders to get on board the reality express. The time for petty self-interests based on the most unlikely of occurrences is past. The time for showing courageous leadership by action is at hand.

Floridians, starting with Florida politicians at all levels, need to stand up and urge Congress to open up drilling on the state's Gulf Coast. This will require true leadership and not pander to the mix of Gulf-fronting property owners and environmental activists. It needs to go deeper than just a few at the top, who will be perceived - rightly or wrongly - as just going where the political winds take them. Others who need to stand up for Americans' best interests include Sen. Bill Nelson, Congressmen Vern Buchanan, Connie Mack IV, Gus Bilirakis, C.W. Bill Young, Kathy Castor and Adam Putnam, our local state legislative delegations and county and city commissioners.

Our bondage to foreign oil and the glut of demand coming from China and India are paralyzing us. Without more supply, the price of gas at the pump is likely to go up even further in coming years.

Here are things being done that are not the answer:

• State-sponsored ethanol that is chewing up corn supplies and raising food prices by screwing up the market. What a horrible idea this has been.

• Capping usage to satisfy the illusory monster of fossil-fuel-induced global-warming that is driving policy. This is beginning to pile real costs on average Americans. What's more, there is no scientific consensus on the cause or degree or seriousness of global warming, which means that we are far, far from being able to establish any sound, informed policy.

• Capping supply by not allowing drilling in ANWR, in the Arctic Circle, in the Pacific off the West Coast or in most of the Gulf of Mexico. This may be good politics, but it is bad policy for Americans and has resulted in the duel problem of flattening oil supplies - most of the reason for increasing prices, along with a weak dollar and speculation - and allowing other nations to tap into some of those reserves for their own profit.

For instance, Cuba and China are already drilling in the Gulf 60 miles from Florida, far closer than any U.S. companies are allowed to drill. Mexico is drilling everywhere it can overcome its own corruption. These countries are getting help from Canada and European countries, meaning more U.S. dollars flowing out of the country on each fill-up.

• And to make an elementary, but apparently not obvious, point: Increasing taxes on U.S. oil companies will only increase the price of gas at the pump and reduce capital and incentives for them to explore more. It will do nothing to the much larger state conglomerates in Saudi Arabia, Russia and so on. Basically, it is just aimed at hurting our guys - but it really hurts consumers - to help some self-centered politicians with some muddle-headed voters.

The solution for the short- and mid-term is more supply. And there is plenty available, right under our waters. We in Florida cannot show much leadership on ANWR, or in the Pacific, but we can in the Gulf where we have led the way to make sure drilling stays hundreds of miles away.

There is absolutely no solid reason to oppose drilling for oil in the Gulf. Rigs would not be visible from land, and we have not had an oil spill since 1969 off the coast of California. We've never had one spill from hundreds of rigs in the Gulf, even after the multiple monster hurricane seasons of 2004 and 2005. Calling the risk minimal almost overstates it, but $4-per-gallon gas is a dousing of reality.

The Outer Continental Shelf has an estimated 86 billion barrels of oil and 420 trillion cubic feet of natural gas. But we have blocked 85% of the shelf and only 3% is able to be explored and drilled right now. That blockade comes via a ban that Congress attaches to each year's spending bill and a presidential order that started with President George H.W. Bush. Democrats, bowing to their environmental bosses, have blocked every attempt by Republicans to undo those. Unfortunately, they are usually joined by Florida Republicans who think it is the right move for them politically.

Some of those Republicans have seen the light of supply and demand. More politicians from both parties need to do likewise.

American attitudes are changing as fast as the price of oil. A May Gallup poll found that 57% of Americans now favor drilling in the coastal and wilderness areas that Congress has heretofore blocked. They might even reward politicians who take this stand now. But whether they do, it is the right thing to do.

Some environmentalists make the argument that even if there is not an oil spill from a platform, there is still the higher risk of smaller spills where the oil is shipped to shore. They demand to know where that will be.

But once again, they tunnel in on only one side of the issue. By having onshore oil facilities in Florida, including refineries, we take a step toward accomplishing what so many a chest-thumping politician has advocated in the past: Diversifying our economy.

Drilling in the Gulf nearer Florida offers the opportunity to give our tourism- and construction-driven economy a dash of Texas crude. While we are in the economic dumpers right now, Texas is doing quite well. Many out-of-work construction guys would love to get a decent-paying job in oil - if any was available. And it would cushion us economically somewhat.

The real estate market is trying to come back, and construction will follow. It is possible that oil will come back into some equilibrium on its own - the run-up has been too fast. When the speculation bubble pops, the price will drop some. But it won't go back where it was even a year ago without more supply because the underlying economics of increasing demand remains.

Our economy is tied to the national economy and, to an increasing degree, to the worldwide economy. Globalization is more reality. All are being threatened by the enormous spike in energy prices that we have helped bring on by blockading the Gulf.

It's time to think beyond the straw-man threat of oils spills and consider the concept of leadership over self. During the Civil War, officers on both sides led their men in charges against the enemy. They were out front with identifiable officer hats and swords, putting themselves at great risk. The soldiers behind them took courage in this and pushed forward with the charge.

That is the kind of leadership we need today on drilling for oil. Do we have any more politicians willing to stand up and lead the charge because it is the right thing to do?

Rod Thomson is the executive editor of the Gulf Coast Business Review and can be reached at [email protected].