An Outdated Ban

Wednesday, June 28, 2006

FOR THE PAST quarter of a century, the federal government has banned oil and gas drilling in most U.S. coastal waters. Efforts to relax the ban have been repelled on environmental grounds, but it is time to revisit this policy. Canada and Norway, two countries that care about the environment, have allowed offshore drilling for years and do not regret it. Offshore oil rigs in the western Gulf of Mexico, one of the exceptions to the ban imposed by Congress, endured Hurricane Katrina without spills. The industry's safety record is impressive, and it's even possible that the drilling ban increases the danger of oil spills in coastal waters: Less local drilling means more incoming traffic from oil tankers, which by some reckonings are riskier. Although balancing energy needs with the environment is always hard, the prohibition on offshore extraction cannot be justified.

The House of Representatives is about to vote on this question, probably tomorrow. A bipartisan bill would maintain a ban on drilling within 50 miles of the shoreline and allow states to extend that to 100 miles. But it would lift the congressional restriction on drilling beyond that perimeter. This compromise would give states that are unwilling to countenance the perceived environmental risks a reasonable measure of control over their coasts. But it would also open the way to more drilling.

The economic benefit of that drilling would be especially pronounced if it were aimed at natural gas extraction. Despite all the rhetoric about energy independence, it doesn't make much difference whether the United States gets its oil from its own coastal waters or whether it buys it on world markets. There is one global price for oil; producing more from U.S. waters will bring down that global price, benefiting all consuming countries rather than just U.S. consumers. But natural gas is traded globally only in small quantities, in liquefied form; nearly all of the gas consumed in the United States is produced domestically or in Canada. So producing more natural gas in U.S. coastal waters would bring down U.S. natural gas prices rather than world prices. Because natural gas is much cleaner than its main alternative, coal, this would have environmental as well as economic benefits.

Unfortunately, the House legislation is flawed. It diverts billions of dollars' worth of oil and gas royalties from the federal government to the states, even though the waters from which the resources will come are federal. The states nearest to the oil rigs may feel they carry most of the perceived environmental risks, and some sharing of revenue may be justified to bring them along, but the House bill leans too far in that direction. We hope the bill passes tomorrow, but we also hope this flaw is fixed before it becomes law.

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