All the polling points demonstrates the fact that Americans are ready to start drilling, seeing it as a tangible way to help bring down prices at the pump. Whether or not this notion is true, Republicans continue to score political points hammering the Democrats for standing in the way of a solution that voting citizens support. And, if Democrats want to not only help Americans, but come out as the political winners, it is imperative that Democrats accept drilling, but accept it on their terms, not on Republican terms.
by Jesse Jenkins and Adam Solomon Zemel, Breakthrough Generation
Democratic candidates from Obama on down have said they would be willing to compromise on offshore drilling--if presented with the right compromise. Many see this as a harbinger of energy-related political retreats to come ("if he's ready to open up the OCS, who's to say that Obama won't withdraw support for a cap-and-trade policy when he gets in office"). However, far from simple political posturing, a real compromise on off-shore drilling could pave the way to clean, affordable energy sources for the future, provide long term relief for consumers (i.e. American citizens), and make promises that politicians and the government can actually keep.
All the polling points demonstrates the fact that Americans are ready to start drilling, seeing it as a tangible way to help bring down prices at the pump. Whether or not this notion is true, Republicans continue to score political points hammering the Democrats for standing in the way of a solution that voting citizens support. And, if Democrats want to not only help Americans, but come out as the political winners, it is imperative that Democrats accept drilling, but accept it on their terms, not on Republican terms.
Democrats should make it clear that their support for drilling has nothing to do with false promises of lower gas prices and is entirely conditional upon setting appropriate royalty terms so that oil companies pay their fair share to access valuable public resources. Democrats should demand that any new leases for extraction of oil on public lands require oil companies to pay a royalty advance to fund immediate price relief for hurting Americans.
This royalty advance would look something like this:
Reports from the EIA suggest that opening up the OCS to drilling will yield something like 200,000 barrels of oil a day in 2030. Instead of paying royalties to the US government on the oil once it comes out of the ground, they will pay the royalties in advance. Oil companies have been clamoring to open up the OCS for a decade--back when oil was trading for 20 dollars a barrel. Considering the price of oil today, and what it will be in 2030, the oil companies should be fine paying an advance of 40 dollars on each barrel they will be taking from the ground and selling at a potential of 140 dollars (and probably more) on the barrel. That means that the government would generate 2.92 billion dollars a year by leasing out the OCS, which it could then give to American citizens in such a way that is equitable and provides price relief to consumers who need gas to get to work, pick up their kids, and buy groceries.
On these terms, drilling is about tapping a valuable public resource to fund immediate price relief this year, and not about Republican's false promises of lower oil prices a decade from now. It taps into a common-sense understanding of transactions - it's our land and our resource, so oil companies should pay us to use it - and it ties drilling to real price relief for Americans on Democrats terms. Everyone wins.
