McCain's Speech on Energy on June 17, 2008
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.