McCain Energy Policy Targets Offshore Drilling

Sen. John McCain unveils his proposed energy policy Tuesday. The presumptive Republican presidential nominee argues the United States should lift its ban on offshore drilling.

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MELISSA BLOCK, host:

Today, John McCain headed to the heart of the nation's oil and gas industry. He spoke in Houston this afternoon, where he outlined his views on energy. He called for more offshore oil drilling and later tonight, he'll do some prospecting of his own: He'll attend a pair of fundraisers.

NPR's Scott Horsley joins us now from Houston.

And Scott, we just heard Barack Obama talking in Detroit about reinventing the auto industry. What was John McCain's message there in oil country?

SCOTT HORSLEY: Melissa, you don't come to Houston and talk about plug-in hybrid cars, I guess. John McCain says in the weeks to come, he will offer some bold proposals for new forms of energy. But what he offered today was old-fashioned, carbon-based, supply-side remedies. He wants, as you say, to lift the federal moratorium that prevents offshore drilling along most of the nation's east and west coasts. And he also wants to provide new incentives for the states. So, even if the federal ban is lifted, there's a lot of state opposition to offshore drilling in places like California and Florida. McCain hopes by giving those states a bigger piece of the royalty pie, that might calm some of that opposition.

BLOCK: These ideas, of course, come at a time when drivers are angry about gasoline that's $4 a gallon and headed higher. Would these ideas help?

HORSLEY: In the short run, no. Even though McCain said yesterday lifting the moratorium on offshore drilling would provide some short-term relief, even the supporters, like the American Petroleum Institute, concede it would be seven to 10 years before you'd actually see any additional oil. So the next president - even if he served two terms - would be a lame duck before the first drop of oil would come from many offshore rigs. That's not to say it wouldn't be worth doing, but just it's not likely to help with gasoline prices this summer or next summer or the summer after that.

BLOCK: Now, another short-term idea that John McCain supports is the so-called summer gas-tax holiday.

HORSLEY: That's right. He has proposed suspending the 18-cents-a-gallon federal tax on gasoline through Labor Day. That's been popular with a lot of drivers, but it's been really roundly criticized by economists. They say, first, it wouldn't amount to a whole lot of money for drivers. You might be talking $20 per car per family. And also that it sends the wrong signal. At a time when the oil and gas markets are trying to tell us we need to use less, this would just encourage people to use more.

On Capitol Hill, the gas tax holiday is really not going anywhere. Economists have also been critical of a plan the Democrats have floated for a tax on windfall profits of oil companies. And John McCain today joined the chorus of criticism of that idea. He called it a return to Jimmy Carter's policies - although in the past, McCain has said he himself would be willing to consider a tax on outsized profits of the oil companies.

BLOCK: Scott, John McCain has been trying to appeal to environmentalists in this campaign with some ideas on climate change, for example. Was there anything for them today in his speech in Houston?

HORSLEY: Yes, he has been trying to paint himself as a more green Republican, and today he will renew his opposition to drilling in the Arctic National Wildlife Refuge. He said there's some parts of our country that are just so pristine they shouldn't be disturbed for oil drilling, no matter how clean the drilling technology has become.

And he also gave a pointed plug to conservation, saying it's no longer just a moral luxury or a personal virtue; it's a necessity.And that's a pretty overt dig at Dick Cheney's famous remark that conservation might be a moral virtue, but it's not an answer to the nation's energy needs. So McCain did give a nod to conservation. It wasn't much more than a nod, but maybe it's too much to expect a candidate to talk about, you know, fuel economy or florescent light bulbs in Houston right before he holds a couple of fundraisers.

BLOCK: Okay, Scott, thanks so much.

HORSLEY: My pleasure.

BLOCK: That's NPR's Scott Horsley in Houston with the McCain campaign.

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McCain Calls on Congress to Lift Offshore Drilling Ban

Republican presidential hopeful John McCain has offered his prescription for high-priced oil and gasoline: more drilling off the U.S. coast.

The Arizona senator told an audience in Houston on Tuesday that he would like to lift the federal ban on offshore drilling as a way to reduce America's dependence on imported oil. McCain says the U.S. has mortgaged its economy and its national security to foreign oil producers, many of whom do not have America's best interests at heart.

In the long run, he says, the country needs to seek out alternatives to oil, including wind, solar and nuclear power. But he says Americans struggling to pay $4 for a gallon of gasoline cannot afford to wait for those "far off plans of futurists and politicians."

His proposed short-term fix is more drilling now off the coasts of Florida, California and elsewhere. "We have proven oil reserves of at least 21 billion barrels in the United States," he said. "But a broad federal moratorium stands in the way of energy exploration and production. And I believe it's time for the federal government to lift these restrictions and to put our own reserves to use."

That was a message tailor-made for the crowd in Houston, who responded with a standing ovation. Petroleum geologist Clint Moore was sitting in the front row. He says opening the door to offshore drilling is long overdue.

"We wouldn't be having the problems that we're having today in terms of supply if we'd opened up a lot of areas that have been in moratorium —not only the offshore areas of the East Coast and the Florida coast and the West Coast. We also need to be looking at the Alaska areas as well," he said.

McCain's Democratic opponent, Illinois Sen. Barack Obama, opposes offshore drilling. But President Bush promises a renewed push for drilling offshore and in the Arctic National Wildlife Refuge. McCain previously opposed drilling in both areas, and he hasn't changed his mind yet about Alaska.

"When America set aside the Arctic National Wildlife Refuge, we called it a refuge for a reason," he said.

But McCain says the U.S. has the know-how and the technology to drill for oil offshore without damaging the environment. Independent energy analyst Phillip Verleger agrees, but he says even if the moratorium were lifted, it would take years for new offshore rigs to produce any oil.

"It will not be in the term of the next president that we will see much significant increase in production," Verleger said, "even if we were to change the moratorium, say, on Jan. 20, 2009."

Verleger and other energy economists say the best way to address high gas prices is through conservation and improved efficiency.

"We're only going to get out of this problem by using less," he said.

McCain did give a nod to that idea in his speech, and in doing so, he distanced himself from Vice President Dick Cheney, who famously dismissed conservation in 2001 as merely a personal virtue, not a solution to the nation's energy needs.

High gas prices are already forcing drivers to conserve, albeit involuntarily. McCain renewed his call for a temporary lifting of the federal gas tax, even though economists say that would just encourage people to drive more. Although McCain said earlier this year he'd be willing to consider a tax on oil companies' outsize profits, on Tuesday he criticized Obama for backing a windfall-profits tax.

While some of the run-up in oil prices can be explained by the fundamentals of supply and demand, McCain says financial speculators are also partly to blame.

"And while a few reckless speculators are counting their paper profits, most Americans are coming up on the short end, using more and more of their hard-earned paychecks to buy gas for the truck, tractor or family car," he said.

McCain called for stepped up regulation to make energy markets more transparent and prevent manipulation. Some critics say it was McCain's economic mentor, former Texas Sen. Phil Gramm, who helped make the energy markets less transparent with legislation earlier this decade.

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