Offshore Drilling Ban Expires

Twenty-seven years after it was first established, he Congressional ban on offshore drilling officially and quietly expired today. The ban was not a prohibition on drilling per se. Rather, it was a ban on appropriating money for the Interior Department to process of new drilling leases. With the beginning of the new fiscal year, that prohibition will end, once Congress passes a budget resolution that restores the funding. After years of opposition to increasing domestic supplies of energy, a full year of fighting House Republicans on the issue, and a summer of defending itself against a vocal Republican minority and overwhelming public support for increased oil drilling, Congressional Democrats agreed last week to allow the ban to lapse this year.

New drilling, and the economic activity it will bring in the form of jobs, investment, and lower gas prices, could not come at a better time for the American economy. American oil companies, barred from exploration in domestic waters for so long, could be eager to return home to do business in America's relatively friendly business clime. They will bring jobs and capital with them that otherwise would have benefit ted the economies of other countries.

Exploration in the Outer Continental Shelf will likely lead to greater than anticipated yields. Historically, estimates of total recoverable reserves in a given field are low, and advances in drilling and recovery techniques will almost certainly increase the expected yields from offshore drilling. That oil will eventually hit the world market, some estimates run as little as three years, increasing overall supplies and lowering the price of a barrel of oil. Oil prices have been on a steady decline since mid-July, interrupted only by Hurricane Gustav and the financial turmoil of the last two weeks, when President Bush lifted the Executive branch ban on offshore drilling. Oil prices ended the day at $102 per barrel, up slightly recently. But that price represents a 31 percent drop from the record high of over $147 a barrel set on July 11th, four days before the president lifted the Executive ban.

House Republicans deserve all the credit for the expiration of the drilling ban. It was the August Republican protest on the floor of the House that finally convinced Democrats they would be held accountable if they continued to stand in the way of increased production in the face of high gasoline and oil prices. Democrats wisely decided not to force the issue roughly six weeks before an election, handing the Republicans a legislative victory of enormous proportions.