NCPA - National Center for Policy Analysis


July 31, 2006

The United States is the only industrialized coastal country on earth that is not actively seeking new oil deposits off its shores, says H. Sterling Burnett is a senior fellow at the National Center for Policy Analysis.

However, Congress finally is considering bills that would end the federal moratoria on new drilling.  Currently, production on the U.S. Outer Continental Shelf (OCS) is a net loser for coastal states, says Burnett:

  • The federal government reaps almost all of the benefits from OCS production; it gets all of the revenue from the royalties, leases and taxes, while the states bear most of the risks.
  • If spills occur, it is the states that lose tourist revenue and their environments that suffer.

In late June, the House of Representatives passed the "Deep Ocean Energy Resources Act of 2006," which would end the federal moratorium on new offshore oil and gas production on most of the OCS.  The House bill:

  • Lifts the leasing ban beyond 100 miles from state shores.
  • Allows new production between 50 miles and 100 miles of state shores, unless a state acts to block new leases.
  • Permanently bans exploration and production within 50 miles of state shores unless a state chooses to opt-out of the restriction.

In exchange, states that choose to allow drilling off their shores would share the revenue with the federal government.  Initially, coastal states would get 25 percent of the proceeds, but their share could rise to as much as 75 percent of the revenues in the future, says Burnett.

Source: H. Sterling Burnett, "Should Congress ease drilling ban?

Yes: Mideast crisis raises energy security concern," Bradenton Herald, July 31, 2006.


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