Americas News
Obama's Drilling Ban Meaningless for Producers Now, But Could Tee Up Price Jumps in Future Years
Critics of U.S. President Barack Obama point to his promise to not open the Atlantic Coast for oil and gas drilling as yet another example of someone who favours rhetoric over substance, with the move said to be meaningless for oil producers in the near term.
Liam Denning, a columnist for Bloomberg Gadfly, equates Obama's ban as "a little like me promising not to become a brain surgeon," adding that with drillers more concerned about appeasing their bankers than seeking new frontiers to conquer, "it's an easy commitment to make."
Obama announced the drilling ban on Tuesday, reportedly upon pressure from the Pentagon and coastal communities; under the ban, Virginia, North Carolina, South Carolina, Georgia, and Florida will be off-limits for drilling until 2022 due to perceived risks to the fishing and tourism industries.
Just a year ago, Obama said he would open up the east coast to oil and gas exploration.
The White House has indicated a small possibility exists for future drilling in the Arctic and will consider leases at locations within the Chukchi and Beaufort seas, as well as Cook Inlet.
Predictably, Greenpeace in a statement views Obama's turnaround as "the beginning of the end of the oil age," but Denning notes that in addition to being an easy commitment, "it does mean a potential source of supply for the longer term has been delayed by at least another five years.
"Given that oil majors are slashing investment, particularly in larger projects with long lead times such as deep water prospects, this could tee up big jumps in prices further down the line."
Obama's ban follows his proposal in February to impose a $10 per barrel tax on oil, which prompted Tom Pyle, president of the American Energy Alliance, to state that "There's nothing like a president in his last year in office to show us his stripes."
