OCS: A Positive Step for Florida’s and USA’s Energy Future July 20, 2006
On December 12, 2005, AIF became the first statewide business organization to call for expanded exploration and drilling for oil and natural gas in the Outer Continental Shelf (OCS), more commonly referred to as the eastern Gulf of Mexico (GOM). AIF took this controversial but visionary position because we believed that Governor Jeb Bush was correct when he ascertained that Florida desperately needed to protect our future by suggesting a 125-mile buffer in the GOM that would both safeguard our tourism industry and our fragile environment. Governor Bush knew that the impending demise of the moratoria in 2012 would leave Florida in a weakened bargaining position the closer that we got to that date, so he proposed a radical idea for a Florida elected official – allow drilling but with strict requirements beginning with the 125 mile buffer. Immediately he was attacked unmercifully from all sides as capitulating on a keystone of Florida politics – never allow drilling off Florida’s coast. Thankfully, Governor Bush persevered and eventually fashioned a compromise with Congressman Richard Pombo, the Chair of the U.S. House Energy Committee. He secured the support of Congressman Jeff Miller, whose congressional district (#1) is not only home to the largest military base in the world, but home to some of the most pristine beaches anywhere on the globe. But alas, at that time the energy bill failed to secure the votes necessary for passage.
Meanwhile, because of a variety of reasons, including the unprecedented 2005 hurricane season, gasoline prices continued to rise along with the price of natural gas. The latter is a very key issue because Florida’s agricultural industry (our second largest business sector) is heavily dependent on natural gas as it is a key ingredient in the manufacture of fertilizer. Moreover, about fifteen years ago, when natural gas was inexpensive and air quality became a huge issue, Florida utilities switched to this cleaner fuel. However, as time progressed, so too has the price of natural gas, and today America enjoys an unfortunate truism: U.S. natural gas prices are the highest in the world! All of a sudden, Governor Bush and AIF’s logic looked right on.
It isn’t just agriculture and utilities that are suffering though. In addition, road builders have been hard hit because oil is a component of asphalt roads. Thus, even though the state has made significant infusion of new dollars in the last two years for traffic infrastructure, we will, in fact, build less roads than originally planned because of this increase in raw material costs. As we now know, the price of oil, and thus of energy, is having an adverse impact across the board on our economy here in Florida and around the country.
Interestingly, Floridians get it! In December 2005, FloridaInsider did a poll and it found back then that Floridians already were changing their perspective on drilling in the GOM. That poll showed that 46% of Floridians were opposed to drilling, 44% were in favor and 10% had no opinion. This earth-shattering revelation, however, was only the beginning. Despite vocal opposition by some politicians and inaccurate scare tactics by left-wing environmentalists, the people continued to lead on this critical issue. In fact, just three weeks ago, a new statewide poll showed that 59% of Floridians were now in favor of drilling for natural gas in the GOM.
While the U.S. was unilaterally declaring that drilling in the GOM a no-go issue, Cuba has recently inked deals with Chinese and Spanish oil companies that will allow drilling in international waters just 45 miles from Key West, our most ecologically fragile environment in the state. Yet despite this fact, some elected leaders continued to declare that there was not going to be drilling off Florida coasts. However, a few weeks ago, in a 232-187 vote, the U.S. House adopted the Deep Ocean Energy Resources Act (H.R. 4761) to safely unlock the Outer Continental Shelf (OCS) to energy exploration and development. With significant leadership from Congressman Adam Putnam, the Florida Delegation voted of 14-11 on the bill. This has put tremendous pressure on the U.S. Senate to bring drilling in the Gulf up for a vote. Just the other night, while I was in Washington, DC, it was announced in the evening network news that there now appears to be agreement to allow drilling off Florida’s coast – at the 125 mile buffer that Governor Bush proposed last winter! While the agreement must now be put into writing and the entire bill must be considered before the entire U.S. Senate, the agreement and its passage would put conferees in a framework to send a proposal back to both legislative chambers that provides new access for energy production, secures military needs, and affords a buffer of environmental protection for our Florida beaches.
No one should mistake this fight for natural gas and oil as the solution to our high costs. Nor can we afford to ignore energy conservation, enhanced nuclear energy or expanded use of renewable energy sources. But the reality is that despite what environmentalists would want you to believe, the opportunity for any of these alternatives to solve our energy problems for anytime in the next decade or decade and a half is minimal. Does that mean that we shouldn’t work steadily to embrace these alternatives? No, we absolutely must. It’s just that, as Americans, we cannot afford to wait until these new technologies kick in. If we were to realize alternative energy sources in excess of 5% within the next 20 years, we would be incredibly lucky. So, in our view, it doesn’t make sense to unilaterally exclude these sources of energy that the Minerals Management Service (MMS) indicates are below the surface of the Gulf. They project that there are more than 1 billion gallons of oil and over 5 trillion cubic feet of natural gas! I am told by energy company representatives that we could see natural gas being produced in these lease areas as quickly as within 18 months after a lease sale is completed. While oil won’t be available for years to come, the sooner we begin, the sooner we can bring it to market.
Within the past few days, the environmental community has begun a campaign to impugn the motives of Congressman Adam Putnam, the number five GOP leader in the House, because of his leadership efforts on this energy bill. Part of the campaign includes full page advertisements in newspapers such as The Tampa Tribune. Instead, we all should be saluting him, Governor Bush and Congressman Miller for their foresightedness in realizing that our energy problems are not going to be resolved by ignoring reserves that are available, but by proposing solutions that represent a reasonable compromise.
In the coming days and weeks I can assure you that there will be a hue and cry from liberal environmentalists that we are selling our collective souls for a few gallons of gas. Unfortunately for us, none of them would ever be happy unless we all traveled by bicycles or on foot. The idea that drilling will hurt tourism is misleading. Since one can only see 18 miles to the horizon over the ocean, rigs that are many, many miles out to sea will have no impact on tourists because they will not be able to see anything, and if tourists can’t see it, it will not be a problem. Also, please realize that the high cost of gas has cut the projections for growth in tourism in Florida this year by over half! As for the environmental consequences, the idea that rigs will produce “tar balls on the beach” is a misnomer. Tar balls on the shore regretfully come from ships and/or barges illegally bilge pumping oil – not from drilling for it. In fact, even though the drilling will be in the eastern GOM, all of the oil and natural gas will still go west – to Mobile, New Orleans and Texas, because that is where the rail heads are and the pipelines feed into the nation’s refining and processing infrastructure. And if you hear the “Big Lie” that 7 million gallons of oil were spilled from Hurricane Katrina, remember that the truth is that it was from an on-shore tank farm in Louisiana, much like the hundreds we have right here in Florida today, not from a platform in the Gulf!
In closing, it also appears that Florida may also benefit financially from these oil and natural gas leases. This is not an argument that we have advanced in the past because, truthfully, we didn’t want to make this issue simply about money. But now that it appears that we may receive royalties from these leases, let’s make sure that we use these monies in a responsible fashion. I would propose that the dollars be used for the continued purchase of environmentally-sensitive lands to resolve some of our growth management issues such as storm water run-off, to further provide incentives for energy conservation, and most importantly, for the commercialization of any new energy technologies that our universities may develop in the coming years. In this fashion, this windfall of energy dollars could help to protect our beautiful state for future generations. We have been accused repeatedly by the environmentalists of being shills for the oil and gas industry and selling Florida short. The truth is that there are always two sides to every story and that each side has the right to be heard. When AIF took this unenviable position, many thought we were crazy. But that is why there must be an organization like AIF – to take the unpopular stance and then advocate for it, regardless of the outcome. We could just have easily lost on this one, but it turns out that Floridians can truly wade through all of the bluster, recognize appropriate leadership, and make their voices heard. Isn’t that what our system of democracy is really all about?
516 North Adams Street ● Post Office Box 784 ● Tallahassee, Florida 32302-0784 ● Phone: (850) 224-7173 ● Fax: (850) 224-6532 ● www.aif.com
