Obama, McCain Differ On Energy Policy

Presidential candidates Barack Obama and John McCain have been sparring over energy policy. McCain's plan to expand offshore oil drilling seems to be catching on. Obama has responded with his own call for energy rebates, to be funded by a windfall tax on oil companies.

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Senator Barack Obama is calling for a 1,000-dollar tax rebate to help American families pay their rising energy bills. Mr. Obama would pay for the 65-billion-dollar plan with a new windfall profits tax on oil companies. The Democrat's proposal comes at a time when his Republican rival for president, John McCain, has apparently been scoring points with his plan to expand offshore oil drilling. NPR's Scott Horsley reports.

SCOTT HORSLEY: You don't need polling data to know that John McCain's offshore drilling proposal is hitting pay dirt. You just need an applause meter. McCain got a standing ovation this week when he discussed his plan during a town hall meeting in Racine, Wisconsin.

Senator JOHN MCCAIN (Republican, Arizona): We must begin immediately in drilling offshore so we can get some of the oil that's off our own coast.

(Soundbite of applause)

Senator MCCAIN: We have to begin that drilling, and Senator Obama opposes it.

(Soundbite of applause and cheering)

HORSLEY: Never mind that most energy experts say it would take years for offshore drilling to produce significant new oil. Severin Borenstein directs the energy center at UC Berkeley.

Dr. SEVERIN BORENSTEIN (Director, University of California Energy Institute): Exploration off the United States' coastlines will produce oil and natural gas out in the future, but in the very short term it will have no effect at all. Even in the longer term, it's going to be a pretty small hit on the world oil market. And so the price reductions we'd see, even five or 10 years from now, from the additional oil would be very, very small.

HORSLEY: Obama made the same point this week in Grand Rapids, Iowa, where he said McCain's plan is backed by the same oil interests that helped shape energy policy under President Bush.

Senator BARACK OBAMA (Democrat, Illinois): Although it won't save you dollars at the pump, I have to say that it has helped raise campaign dollars. Because last month, Senator McCain raised more than a million dollars from, guess who?

(Soundbite of laughter)

Senator OBAMA: Oil and gas executives. That's not a strategy designed to end our energy crisis. It's a strategy designed to get politicians through an election.

HORSLEY: If that's so, there are signs the strategy is working. Recent Quinnipiac University poll showed McCain gaining ground on Obama in half a dozen key swing states. Even in Florida, where voters have been fiercely protective of their shoreline, 60 percent now support more offshore drilling.

Mr. PETER BROWN (Assistant Director, Quinnipiac University Polling Institute): Offshore drilling is much more acceptable than it used to be, and it's obvious because of four-dollar gasoline.

HORSLEY: Peter Brown, who helps run the Quinnipiac poll, say Americans' frustration with high gas prices gives McCain an opening to address what has been one of his biggest problems.

Mr. BROWN: His biggest problem is that Americans think that Barack Obama is better able to fix the economy. The potential for the energy issue to give Senator McCain an opportunity to convince Americans that he does know how to fix the economy is very real. It could very much change the dynamic of this race.

HORSLEY: McCain has also called for a big expansion of nuclear power, and he wants to invest two billion dollars a year in cleaner-burning coal technology despite his general resistance to government meddling in the economy.

Senator, you've said you don't want the federal government to pick winners and losers in the energy sector. Why then spend two billion on clean coal?

Senator MCCAIN: Well, because we know clean coal is a winner.

HORSLEY: Coal provides about half the nation's electricity. Obama meanwhile has called for big federal investments in alternative power sources and a push to use energy more efficiently. After a bipartisan group of lawmakers proposed an energy compromise yesterday, Obama said he'd be willing to support limited offshore drilling if that's what it takes to achieve the other elements of his plan. A spokesman for McCain said he welcomes the growing bipartisan support for McCain's comprehensive energy approach. Scott Horsley, NPR News.

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Candidates Clash On Impact Of Offshore Drilling

John McCain and Barack Obama
Gabriel Bouys/Emmanuel Dunand/AFP/Getty Images

Comparing the Candidates


McCain: He supports offshore drilling as a "short-term" way to help resolve high gas prices. During a speech in Houston, McCain said the U.S. has the know-how and technology to drill offshore without harming the environment. McCain has been accused of "flip-flopping" on this issue; as late as mid-May, McCain said the U.S. instead should focus on developing alternative energy.

Obama: He has said that offshore drilling does not make sense, since it would harm the environment and ultimately would not lower the current price of oil because, he said, this type of oil exploration could take years.

offshore oil rig i i

The Molikpaq offshore oil platform, which produces upto 70,000 barrels a day during the six-month ice free season, stands on the sea with floating ice floe offshore of Sakhalin island, Far Eastern Russia, April 27, 2003. Ursula Hyzy/AFP hide caption

itoggle caption Ursula Hyzy/AFP
offshore oil rig

The Molikpaq offshore oil platform, which produces upto 70,000 barrels a day during the six-month ice free season, stands on the sea with floating ice floe offshore of Sakhalin island, Far Eastern Russia, April 27, 2003.

Ursula Hyzy/AFP

Arizona Sen. John McCain and Illinois Sen. Barack Obama agree on at least one thing: the price of oil is painfully high.

But they differ on what to do about it — particularly whether companies should be allowed to start drilling for oil and gas off the Pacific and Atlantic coastlines. President Bush recently lifted a 27-year ban on offshore drilling, which was created after a major oil spill off the coast of California in 1969.

The candidates were on record about new drilling a month before President Bush lifted the drilling moratorium. In mid-June, in the oil-friendly city of Houston, McCain said that he would call for lifting the federal moratorium for states that "choose to permit exploration."

"I think that this — and perhaps providing additional incentives to permit exploration off their coasts — would be very helpful in the short term for resolving our energy crisis," he said.

Days later, Obama fired back in Jacksonville, Fla., where drilling isn't such a popular idea. "It would have long-term consequences for our coastlines, but no short-term benefits, since it would take at least 10 years to get any oil," he said.

And that's not soon enough, he added: "Offshore drilling would not lower gas prices today."

Drilling To Relieve The Oil Crisis?

No one says that drilling offshore would change gas prices today. The Department of Energy says there may be 18 billion barrels of oil in coastal waters, but they also say that drilling for it would not have a significant impact on production or prices until 2030.

Even people in the oil industry say drilling won't ease the oil pinch. Matthew Simmons is head of Simmons and Company, among the largest banks investing in energy. "We basically wasted away 20 years," he said. "Now, basically, it's a terrific idea, but we ran out the clock. It's really misleading to hold that out as a panacea. It won't work. It might work for our grandchildren."

Geologists have identified reservoirs or undersea "structures" that might contain oil. But Simmons says that's guesswork. "We don't have any idea whether any of it is there," he said.

But first, the government has to lease the offshore sites to oil companies. The companies then have to probe the seabed to find out what's there. Then there are years of exploratory drilling, says Simmons — if anyone can find rigs to do the drilling.

"The problem is that the worldwide capacity to build rigs now has a backlog going out until about 2013, and we won't add enough rigs to even start to replace the very old rig fleet that we have," he said.

All of that before any oil actually comes out of the seabed.

Some in the oil business are more optimistic. Scott Smith is vice president of the energy engineering and construction company Black and Veatch.

"I think it's short-sighted, in my opinion, to say it's not going to make a difference," Smith says. "This is just one piece of the puzzle. We know that there's a lot of uncertainty around how much reserves and production it will bring to bear, but having additional options makes more sense than keeping them off the table."

Smith says it isn't likely that oil companies will actually recover the 18 billion barrels the government estimates is out there. But he says oil exploration is full of surprises.

"As you drill, you learn more about the geology in the region. You tend to find there's more resources there than you first thought," he said.

He also says drilling is only half the job; America also needs to curb its thirst for gas by making vehicles more fuel-efficient.

Candidates On Fuel Efficiency

McCain says there's the psychological lift from knowing the country is trying to replace foreign oil. But Obama counters that the environmental price is too high.

Environmental groups agree. They argue that while there have been few serious spills from rigs, the payoff doesn't justify the risk to beaches and wildlife.

Ultimately, Congress will have to take a stand.

Although the White House has lifted its ban on new drilling, Congress enacted a moratorium beginning in 1982 that only Congress can remove.

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