Lack of New Drilling Blamed on Oil Companies
With gas prices topping $4 a gallon and the idea of tapping into oil under the Arctic National Wildlife Refuge or the Outer Continental Shelf becoming more popular, liberal members of Congress are changing the basis for their opposition to drilling.
Opposition to opening up new drilling has traditionally focused on environmental concerns, but the chairman of the Democratic Congressional Campaign Committee on June 15 accused oil companies of not using what they already have.
When CNN host Wolf Blitzer asked "why not start drilling" in more U.S. areas "that could dramatically increase supply and as a result reduce the price per barrel or the price at the pump?" Blitzer noted that House Speaker Nancy Pelosi (D-Calif.) "votes against every one of these drilling propositions."
âWell, we are drilling. And there is nothing wrong with drilling. We have lots of oil companies in the United States that are drilling,â Rep. Chris Van Hollen, D-Md., said on CNNâs âLate Edition with Wolf Blitzer. â[A]nd in fact there are 60 million acres of federal lands that are currently leased to the oil and gas companies that are sitting idle. Theyâre not drilling. They like the status quo. They like the way things are going.â
But the problem isnât that oil companies âlike the status quo.â Itâs that lands where drilling is currently allowed donât offer enough oil or gas to make extraction efficient, according to Red Cavaney, president of the industry-representing American Petroleum Institute (API).
âWell, we are developing,â Cavaney said on âFox News Sundayâ June 15. âAnd thereâs a big misunderstanding. If they understood the industry, they would appreciate the fact that we bid for those leases competitively in the open market. We pay the government to get them.â
According to Cavaney, oil companies canât just sit on them to maintain the status quo as Van Hollen claimed â they do eventually go back to the government if they arenât used. The problem is there is no oil or gas on the land to be recovered.
âWe have to pay annual lease fees on those particular leases,â Cavaney explained. âAnd at the end of the lease term â five years, six years, whatever it may be â if we havenât done anything on those leases, they go back to the government to be bid again. Whatâs going on is they â the first step in our industry is called exploration. In other words, the Creator didnât put oil and gas on every plot of land, so we have to go and explore.â
âThereâs in very few cases where there is oil and gas in amounts that are commercially usable and those are the ones that you can develop,â Cavaney said. âThe rest of them, why drill where you know thereâs no oil or gas and let those things go back to the government?â
However, rather than putting oil-rich lands in the Artic National Wildlife Refuge (ANWR) or on the Outer Continental Shelf (OCS) up for lease, Van Hollen proposed on âLate Editionâ to take other leases from the oil companies, a measure which wouldnât produce more oil.
âWeâre going to have legislation that weâre going to consider shortly that is âuse it or lose it,ââ Van Hollen added. âIf you are going to hold up these 68 million of federal lands, youâve got to start drilling for oil or else somebody else should have an opportunity to do it. Because the fact of the matter is theyâve been idle for all these many years. So the point is thereâs lots of acreage out there already under lease.â
House Majority Leader Steny Hoyer (D-MD) made the same argument against drilling in ANWR or on the OCS on CNBCâs June 12 âSquawk Box,â claiming oil companies werenât producing oil on leased land, where the industry explained oil canât be recovered in an economically feasible manner.