The announcement last week that the Trump administration wants to open nearly all federal waters to oil exploration and development will win praise from many in the business of extracting hydrocarbons from beneath the earth’s surface, especially those who believe we should drill everywhere oil might exist. Conversely, it will elicit opprobrium from many environmental organizations, particularly those who believe we should drill nowhere.
Ultimately, the most important reactions to the expansion of offshore drilling will come from the federal courts who will hear the inevitable challenges to the draft plan put forward by the Department of Interior (DOI). From this perspective, the Department’s bold plan to launch massive lease sales to drill for oil in the Atlantic, Pacific, and Arctic Oceans seems ill-timed at best and, at worst, too politically motivated to merit the credibility needed for federal rulemaking.
The foundation of federal policy on offshore drilling rests on a five-year planning process established by the 1978 Outer Continental Shelf Lands Act Amendments. The rewrite of the legislation governing offshore oil and gas development followed four years of congressional hearings beginning shortly after the Arab oil embargo, which demonstrated the need for more domestic production. But the 1969 Santa Barbara oil spill was still fresh enough to keep environmental concerns at a high level. The new act required the Secretary of Interior “to obtain a proper balance between the potential for environmental damage, the potential for discovery of oil and gas, and the potential for adverse impact on the coastal zone.” The mandate for five-year plans aimed to provide a better way of evaluating environmental issues, taking into account local conditions, and providing greater certainty for oil and gas companies.
The case for aggressive oil drilling in new regions owned by the government is strongest when prospects on U.S. private lands are meagre, oil prices are high, imports constitute a large share of domestic consumption, and strong environmental protections are in place. On each of these measures, the current case for the administration’s draft plan is weak.
Private, onshore locations continue to provide oil and gas at reasonable prices through hydraulic fracturing or “fracking.” The revolution in oil extraction technology over the past decade — the result of both long-time federal policy and lots of private sector ingenuity — has been a major game changer. There is now less need to put public lands offshore from Oregon to Florida to Maine up for bid to compete with either oil-rich land owned by U.S. citizens or the Gulf of Mexico, which at deeper depths still has plenty of oil.
Oil prices over $100 per barrel were once used to justify expanding the federal lands available for exploration. The rationale was that more supplies could bring some relief to motorists paying top dollar to fill their fuel tanks. Even President Obama was open to drilling off the East Coast and Alaska early in his administration when prices were at historically high levels. However, it would be a stretch to argue that exploration in frontier areas would somehow affect prices at the pump today. Indeed, it is hard to see why companies would want to take on expensive drilling in frontier areas when there are lower-cost alternatives.
As recently as 2006, U.S. net imports of oil stood at 60 percent. This posed several risks, including: sending money abroad that could end up in the hands of terrorists in the Middle East; expanding the U.S. trade deficit; and weakening a major American industry. Since then, however, U.S. dependence on foreign oil has declined every year (except for a minor blip in 2016). When the final numbers for 2017 come in, they are likely to show net imports at about 20 percent — a remarkable turnaround once widely viewed as impossible. In future years, that number could go even lower, due to reliance on regions already producing oil and continued improvement in vehicle efficiency. The bottom line? The national security and economic arguments that were used to justify moving into frontier areas for oil production in the past no longer apply.
Moreover, there is also the matter of protecting the environment — which is both a requirement under federal law and a factor in the quality of life in coastal states. While this is always an important consideration in the creation of federal policy, it carries even greater weight when the risks of accidents are high.
After the Santa Barbara spill, many experts believed that sufficient protections were in place to minimize the risks of deep-water drilling. The 2010 explosion at BP’s Macondo proved otherwise. President Obama’s National Commission on the BP/Deepwater Horizon Oil Spill and Offshore Drilling found that the company’s negligence along with systemic problems in the industry as a whole exposed the Gulf of Mexico to risks that had been previously hard to detect.
The Commission recommended many corrective actions to improve the safety of offshore drilling. These ranged from clearly delineating the DOI’s role in regulating the industry to requiring third-party inspections of blowout preventers, the last line of protection when other systems fail. During the Obama years, the DOI and industry moved to promote safer practices — such as making available capping devices that limit any protracted leakages — even while Congress refused to enact any reforms of offshore drilling.
Now, the Trump administration is proposing to cut back on the safety protections adopted after the BP spill — at the same time that it is trumpeting a massive expansion offshore drilling. This is an awkward juxtaposition of policies, with the DOI trying to have it both ways. Indeed, its draft plan cites the Obama-era regulations — “substantial reforms to improve the safety and reduce the possible adverse environmental impacts of OCS oil and gas activity” at drilling cites — as evidence that drilling can proceed safely, while at the same time trying to repeal those very rules. While Interior might have hoped that this gaffe would go unnoticed, the government-wide effort to reduce safety protections for workers and the environment may come back to haunt the administration in the coming legal and political battles over its controversial drilling plan.
Interior further tainted the case for the new drilling plan with its overtly political handling of the application of the drilling expansion to the State of Florida this past week. Secretary Zinke abruptly cancelled the expansion of drilling for Florida without explaining why states in similar situations were not being treated similarly. This leaves the impression that the decision was based on the politics of next year’s U.S. Senate race, rather than sound policy.
While a case can be made that the country must look ahead to its future oil needs, trying to reverse federal safety requirements and vehicle efficiency standards and politicizing energy policy is not the way to do it. The White House and the Interior Department are undermining their credibility to deliver that message as well as their ability to defend themselves in court.
Jay Hakes is an energy historian who has worked for three U.S. presidents on energy issues.