If the U.S. Won’t Drill Oil Offshore, Other Nations Will

Although President Obama’s executive order imposing a six-month moratorium on drilling for crude oil and natural gas in ultra-deep waters within the 200-mile territorial limit recognized by international law has at least temporarily been suspended by a federal district judge, offshore drilling will not come to a screeching halt even if that precipitous action ultimately is determined to be within his constitutional powers.

As reported in the Wall Street Journal on Friday. July 2, Respol YPF SA, a Spanish company, has announced that next year it will begin drilling exploratory wells off the northern coast of Cuba, just 60 miles south of Key West. Industry experts as well as the U.S. Geological Survey seem confident that substantial deposits of crude oil and natural gas are there for the taking.

America’s oil companies cannot participate in exploiting those deposits because of our long-standing and counterproductive trade embargo against Cuba. (Can anyone identify a benefit flowing from that embargo offsetting the heavy costs imposed on me and other smokers of cigars? I doubt it.)

The point is that if the United States commits to bypassing offshore drilling at depths greater than 500 feet, we will be cutting off our collective nose to spite our collective face. Spain, China, Venezuela and other nations will continue to exploit potential reserves of fossil fuels, wherever they may be found. As a result, more of the world’s supply of crude oil and natural gas will fall into the hands of unfriendly nations.

In the event that Respol experiences a blowout of the same magnitude as the disaster that followed the explosion and sinking of the Deepwater Horizon on April 20, Washington will be even more impotent than it apparently now is, owing to the international dimensions of such an accident. Further ecological and economic damage to our homeland is predictable, given the Obama administration’s inept response to the current crisis and its evident diplomatic failures in dealing with Iran, Afghanistan, Pakistan and other flashpoints in the war on terror.

No cost-effective alternatives to fossil fuels loom on the horizon. As such, America either can develop its known domestic resources, both onshore and off, or continue down a path that leads to greater reliance on energy produced by others. That policy choice would be sensible if global trade were free and open, but is dangerous in a hostile world.

William F. Shughart II is a Senior Fellow at the Independent Institute, the J. Fish Smith Professor in Public Choice at Utah State University, past President of the Southern Economic Association, and editor of the Independent book, Taxing Choice.
Posts by William F. Shughart II | Full Biography and Publications
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