On June 29th, the House of Representatives passed the Deep Ocean Energy Resources (DOER) act. This bill may be taken up by the Senate soon. The legislation is now in the news and the mudslinging has begun. Conservative organizations and media like the Washington Times are pushing the main agenda, which is to open up areas of the US Outer Continental Shelf (OCS) to oil & natural gas E&P (exploration and production).

Over the latest four quarters for which financial data are available, ExxonMobil has spent a greater proportion of its record profits ($36.7 billion) and cash flow repurchasing its common stock ($20.5 billion) than investing capital in oil and gas exploration ($19.1 billion). If Congress is disturbed by this juxtaposition, it ought to do something about it. In fact, Congress has the power to establish an investment climate in which ExxonMobil would be far more likely to use a much larger share of its cash flow drilling for oil and gas than spending the money boosting its stock price...

The potentially liberated OCS area, where federal rules have banned drilling, is believed to contain 19 billion barrels of oil and 86 trillion cubic feet of natural gas. Given that current U.S. proved reserves total 22 billion barrels of oil and about 190 trillion cubic feet of natural gas, the OCS oil and gas reserves unleashed by the House last month represent a huge step in the right direction. With the support of 40 Democrats, the Deep Ocean Energy Resources (DOER) Act passed the House by a 232-187 vote....

Under DOER, drilling would still be banned for the first 50 miles off the coast. However, with the approval of a state's governor and legislature, a state could repeal that ban by petitioning the federal Department of Interior to authorize drilling within that 50-mile limit. Unless a state petitioned Interior to maintain the moratorium beyond 50 miles, DOER would permit drilling in waters 50 to 100 miles offshore. To induce states to permit expanded drilling, DOER offers them a larger share of the royalties. In a concession to Florida, DOER bans drilling within 100 miles of the state's west coast....

Here, we'll take a realistic view of what's going on and investigate the question of whether opening up the OCS to drilling will save us.