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CEO Note: The Real Economics of Offshore Drilling

oil rig in the gulf of mexico

© Oceana/Eduardo Sorensen

Andy Sharpless is the CEO of Oceana.

If you watched this week’s State of the Union address, you may have heard President Obama announce that he was opening 75 percent of our “potential offshore oil and gas resources.”

The good news is that this isn’t news; it’s simply a reiteration of the administration’s current five-year drilling plan that fully protects the Atlantic and Pacific coasts, as well as much of the U.S. Arctic. The bad news, however, is that plan expands offshore drilling to include much more of the Gulf of Mexico than ever before – and worse yet, some of the Arctic. It’s as if the massive 2010 spill never happened.

In other good news, the President expressed his wish to reduce subsidies for oil companies. The oil companies receive about $10 billion a year in tax breaks, and the Obama administration has proposed cutting $4 billion.

I applaud the President’s commitment to reducing subsidies for the big oil companies, although I wish he would go further and eliminate them completely.

Unfortunately, the State of the Union address, as well as this week’s Republican primary debate in Florida, reiterated that our political leaders still fail to grasp a basic economic fact: that increasing our domestic supply of oil will not lower our prices at the gas pump.

Oil is a global commodity, and prices are set on a world market. Multinational companies who drill for oil – like Shell, B.P. and Exxon – will sell to the highest bidder. That may be the U.S. It may just as well be India or China.

As we learned during the 2010 Gulf of Mexico oil disaster, there’s more at stake. National Journal writer Beth Reinhard asked the right question at Monday’s Republican debate when she noted drilling in Florida will create at most 5,000 jobs, while an oil spill threatens the 1 million jobs that depend upon tourism, which contributes $40 billion each year to Florida’s economy.

That’s a high price to pay to help oil companies continue to make record profits. And yet Rick Santorum, on the receiving end of her question, reiterated his support for more domestic drilling.

Unfortunately, oil companies are powerful players in the election season. They dole out enormous contributions to the candidates, which may explain why we see misinformation on both sides of the political aisle.

Here at Oceana, we’ll stick to the facts. More offshore drilling won’t lower your price at the pump, and we’ll continue to fight to protect our beaches and seafood from dirty and dangerous drilling.


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How BP Can Clear its Name: Invest 30% in Clean Energy

Jackie Savitz is Oceana's Senior Campaign Director for Pollution Programs. This post originally appeared at the Huffington Post.

In the 7,000-word State of the Union, President Obama seemed to leave out two letters that loomed large in 2010. "B" and "P" -- the initials of the company that destroyed the lives and livelihoods of Gulf of Mexico residents and did immeasurable destruction to Gulf ecosystems.

But BP was there in spirit. Its campaign contributions helped get many members of Congress and Senators elected, it was implicated in the oil industry effort to paper Washington, D.C. metro stations with ads, and just the day before, the halls of Congress were filled with lobbyists and others clamoring for seats at the Oil Spill Commission hearings.

And while the President didn't say those two letters, BP was implicated in his statement that we need to get 80% of our energy from clean sources by 2035. Because who would be better than BP, a company tarred and feathered and now in need of a clean break, to help us build our clean energy portfolio so it can provide 80% of our electricity by 2035?


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Spotlight on Salmon in the SOTU

All eyes were on President Obama’s State of the Union address last night, and everyone was abuzz about who was sitting with whom, tie color, and economic competitiveness. But according to NPR, the three words that listeners used most to sum up the speech were “inspiring," “hopeful,” and “salmon.” Yes, salmon.

From the transcript:

“We live and do business in the Information Age, but the last major reorganization of the government happened in the age of black-and-white TV. There are 12 different agencies that deal with exports. There are at least five different agencies that deal with housing policy. Then there's my favorite example: The Interior Department is in charge of salmon while they're in fresh water, but the Commerce Department handles them when they're in saltwater. (Laughter.) I hear it gets even more complicated once they're smoked. (Laughter and applause.)

President Obama’s salmon remark was amusing because it’s true. America’s oceans are managed under more than 140 laws implemented by 20 federal agencies. The National Ocean Policy, which Oceana has been working to promote, will help move us away from piecemeal, disjointed management.

The first meeting of the National Ocean Council was in November, and Oceana will continue to work with the Obama Administration to ensure that the oceans -- including salmon -- have a voice.


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