Offshore Drilling and the Economy

The Plum Line reported last week that the decision to open up some Atlantic waters to offshore drilling was designed, not to attract Republicans but Democrats, citing this statement from Senator John Kerry supporting Obama's decision:

In the difficult work of putting together a 60 vote coalition to price carbon, Senator Kerry has put aside his own long-time policy objections and been willing to explore potential energy sources off our coasts as part of a suite of alternative solutions. He and his colleagues are committed to find acceptable compromises on onshore and offshore oil and gas exploration, conducted in an environmentally sensitive manner that protects the interests of the coastal states.

Obama could also be looking to reduce the balance of trade problem created by imported oil as part of the larger effort to get the U.S. economy on a more solid footing. How often have your heard it said that the U.S. is borrowing money from the Chinese to buy oil from the Middle East? The current issue of the Economist includes an interesting analysis showing that net imports of oil and natural gas could decline in the next 15 years:

Increased supply and decreased consumption have radically altered the outlook for imports. Five years ago the EIA [Energy Information Administration] forecast that by 2025 America would be importing 16m barrels of oil a day, or 68% of its needs (see chart 6). Now that forecast has come down to less than 9m. Disappointingly, the total bill will still be higher because prices have gone up so much. But at least the American economy will be less dependent on imported oil.
The outlook for natural gas has changed even more. Five years ago the EIA thought that by 2025 America would be importing 28% of its natural-gas supply, much of that through newly constructed liquefied-natural-gas terminals. That forecast has now come down to 9% of its supply. Construction of a number of LNG terminals approved years ago is on hold.

One thing increased offshore drilling won't do is insulate the U.S. from world energy prices. Even if the U.S. were to completely wean itself from imported oil and gas, domestic energy prices would still be coupled to world prices. The only way to protect our economy from volatile fossil fuel prices is to reduce our use of fossil fuels.