At $5.00 / Gallon What Will Congress and the Environmentalists Say?

By: Richard H. Frank

There is no question that the “deep water” oil leak currently being experienced in the Gulf of Mexico is a disaster of proportions never experienced by offshore exploration in the past. Drilling at a depth of 5000 feet is uncharted territory for the oil industry. Yet, there seems to be some evidence that existing safety shut off valve technology is inadequate at depths being explored by British Petroleum. There is no doubt that BP is responsible to stop the leak and bear the cost for clean-up and damages which will ultimately follow.

The Presidential order placing a moratorium on offshore production is altogether another matter. Whether a knee jerk  or politically motivated reaction to the current crisis, the economic ramifications to a prolonged moratorium and the potential impact on oil-producing related industries will prove devastating to an already sluggish recovery from the recession. An estimated 9 million persons are employed in the affected sector of our economy.

The environmentalists and politicians will totally ignore the fact that there are 759 offshore oil rigs operating world-wide and their record of spills is minimal compared to that of tankers transporting crude to oil refineries.

Although President Obama says he recognizes that domestic production is necessary to transition from oil based energy to alternative sources, his first inclination is to curtail production, over regulate exploration, tax carbon based production and force higher costs on the consuming public as his solution to the present crisis. He contends this is the only incentive to force oil producers to adopt safe measures for production and make alternative energy sources competitive with oil.

If anyone doubts that the executive management at BP is not motivated to stop the leak they know nothing about business. This crisis could eventually lead to the demise of British Petroleum of America. You can bet that while the moratorium is in effect the price of imported oil will surely rise. While the politicians and environmental wackos shout and vilify big oil they should be reminded of June 2008 when the price of a gallon of gasoline reached $4.00. I seem to recall the cry for “drill baby drill” echoing across America.

Rest assured the current leak in the Gulf will be stopped and the clean-up will proceed successfully. Mother Earth is a magnificent creation with the capacity to heal herself and will recover in due course. Oil companies will solve the “deep water” drilling problems provided they are not prohibited from future exploration. When the price of a gallon of gasoline hits $4.00 let us listen to see who will be vilified. Will it be those greedy oil companies or the politicians that cave to the environmental lobby? My bet is that once again it will  be the big oil companies not withstanding the political barriers in place keeping us from achieving energy independence.

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