For God's sakes, drill so we don't have to be dependent for oil on an unstable and hostile Middle East.
That's what a growing number of Republican Congressmen and now even Democrats are saying, as Mideast unrest is spiking oil prices higher, causing gas prices to possibly rise to $5 a gallon by Memorial Day in some parts of the country. That could prove to be kryptonite to the stock market's two year bull run. Congressmen who are arguing for more drilling in the U.S. add that doing so would also create much needed jobs.
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Instead, Administration officials are hinting at drawing down from the U.S.'s $75 billion Strategic Petroleum Reserve. The effect on oil prices would be nominal, as the Reserve holds just 727 million barrels of oil, equal to about two months worth of driving.
The Financial Times notes that the SPR only hit capacity a little over a year ago, and that the early '70s law launching the reserve stipulates that it can only have a “full draw down,” equal to at most half of daily imports, in the event of a severe shortage. The U.S. government did just two “limited draw downs” in the past 20 years, the FT notes, 21 million barrels during the first Gulf war and 11 million after hurricane Katrina wrecked oil rigs in the Gulf of Mexico and inland.
Now Arkansas Democrat Congressman Mike Ross has helped introduce a resolution calling on the White House to jump start offshore drilling. In a statement he says the bill would help "to streamline the process for approving shallow and deep water oil and gas drilling in the Gulf of Mexico and Alaska," adding "delays are constricting the nation’s supply of domestic energy and costing the U.S. jobs and revenue."
Rep. Ross notes in his statement that "more than 400,000 jobs across the Gulf Coast, including many in Arkansas, are tied to the offshore drilling industry, which provides about $20 billion in revenue to federal, state and local governments through royalties, bonuses and tax collections.
Since the Interior Department lifted the ban on drilling in October 2010, the agency has only issued 37 new shallow water permits and only one new permit for deepwater exploration, to Houston's Noble Energy. Ross said the substantial delays have caused at least 12 rigs (shallow and deepwater) to depart from the Gulf of Mexico, taking jobs with them, and more are expected to follow."
Ross adds in his statement that “Our country spends just over $300 billion a year importing energy from other nations. By increasing domestic drilling using 21st century standards and technologies – not BP standards – we can help make America more energy independent, be good stewards of the environment and keep thousands of jobs here at home."
Meanwhile, on another front, New York Democratic Congressman Tim Bishop introduced a bill that would stop "price gouging" at the pump. It would "authorize up to $500 million in criminal penalties for selling oil, gasoline and diesel at prices that are unconscionably excessive and take unfair advantage of circumstances related to an international crisis," Mr. Bishop said in a statement.
Mr. Bishop has also noted that "the Department of Energy forecasts gas prices could spike to a national average of more than $4 a gallon for regular this summer – about 50 cents higher than Tuesday's national average of about $3.50."
Congressmen Bishop says in a statement the bill would give the Federal Trade Commission the power to bring "enforcement actions concerning companies with total U.S. sales of gasoline and other petroleum distillates in excess of $10 billion per year. The civil penalty for engaging in price gouging would be a fine up to $100 million and the criminal penalty for a corporation engaging in price gouging would be up to $500 million."
Bishop says his legislation has already attracted support from Representatives Jerry McNerney [CA], Tim Walz (MN), Mike McIntyre [NC], Bruce Braley [IA], John Yarmuth [KY], and Ben Chandler [KY] who have signed on as original cosponsors.