Few countries are more gung-ho about offshore oil drilling than Brazil. The recent discovery of the supergiant Tupi field off the coast of Rio de Janeiro promises to put Brazil into the same league with the oil exporting big boys.
But Brazil is holding off on auctioning new offshore exploration areas until at least 2009. Not because the countrys leftist leaders suddenly have had second thoughts about offshore oil production. Far from it. The reason is that the specialized equipment needed to drill through thousands of feet of seawater and seabed is very hard to come by.
This has been known in the oil biz for some time, but now the deepwater drilling rig shortage has earned headlines in The New York Times. The editors decision to give this story space probably had something to do with John McCains call for lifting a moratorium on offshore drilling and letting coastal states choose whether to allow exploration.
How much oil would come to market if the moratorium went away? None in the short term. In the long run, its hard to say.
First, there is already oil to be had in offshore areas open to drilling. The Minerals Management Service estimates that there may be 19 billion barrels of "technically recoverable, undiscovered" oil in coastal areas under moratorium. But 67 billion barrels are thought to exist in offshore areas open to exploration. The grand total of 86 billion barrels is equivalent to about 11 years of U.S. consumption.
Note the careful language: "Technically recoverable" means the oil can be produced, but doesnt say whether it would be profitable to do so. "Undiscovered" means that geologists think the oil is present, but no one knows for sure.
Regardless of how good or bad the estimates are, the shortage of deepwater drilling rigs is likely to constrain the offshore oil industry into 2012 or beyond.
Not every coastal state would consent to drilling. California and Florida, for example, are rather particular about their beaches and the hordes of spendthrift tourists that they draw.
And whatever new resources the U.S. adds to the global oil pool could be counterbalanced by roaring demand overseas, keeping upward pressure on prices.
So why did McCain take the political risks of bringing the idea up? Largely, its symbolic. McCain thought it wise to send a message to OPEC that U.S. energy policy will move beyond begging the cartel bosses to turn their production knobs up a bit.
Like Barack Obama, McCain must appeal to diverse constituencies to assemble a winning electoral coalition. As part of his strategy, hes trying to paddle a middle course between Obama on his left and Republican "drill till we drop" orthodoxy on his right.
Notice in his Houston energy policy speech that he reiterated his opposition to drilling for oil in the Arctic National Wildlife Refuge. Not an easy sell in Houston.
He also talked about the centerpiece of his energy package: a cap-and-trade plan to cut greenhouse gas emissions.
Anyone who thinks that fighting climate change is popular among Texas GOP partisans should have been at the state Republican convention last weekend. Earnest people insisted to volunteers at the Republicans for Environmental Protection's Texas chapter booth that sunspots have caused global warming. No, wait, its the oceans.
And for all who remember Dick Cheney's sneer that conservation is a mere personal virtue, McCain said, no, Mr. Vice President, it's much more.
So, McCain took hits from both sides. As Harry Truman said, the kitchen can get hot, especially during uncertain times. When people are stressed by high fuel prices, the allure of quick fixes is powerful. For dogmatic Republicans, it's drill everywhere. For dogmatic Democrats, it's tax the hell out of Big Oil.
At the end of the day, both presidential candidates know that fixing our energy problem doesnt lend itself to easy elixirs. We have years of hard work ahead digging ourselves out of our energy predicament.
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