Obama oil plan aims to hush rancor in Congress

By @ibtimes on

President Barack Obama's new plan to expand oil production in the Gulf of Mexico and Alaska is an attempt to deflate Republican criticism that he's not doing enough to expand drilling and appeal to voters as they struggle with high energy cost.

Obama announced measures in his weekly radio address on Saturday to push the Interior Department to expand domestic oil production in Alaska and the Gulf of Mexico.

The administration's effort to open up oil and natural gas drilling -- without new Congressional legislation -- would not in the short term push down $4-per-gallon gasoline.

But ahead of next year's presidential election, any action seen to open up domestic oil resources could hush Republicans in Congress who are trying to pin the high prices on Obama for his regulations after last year's mammoth BP oil spill in the Gulf of Mexico.

Republicans in the House of Representatives have passed three bills to open up offshore drilling, but they face an uphill battle in the Democrat-led Senate. Fred Upton, the chairman of the Energy and Commerce committee, is also blaming the administration's environmental rules for raising gasoline prices by adding compliance costs onto oil refineries.

The president is working to take the sting out of some Republican arguments that his administration is unfriendly to oil and gas development, Whitney Stanco, an energy policy analyst at MF Global, said in a research note.

After the killing of Osama bin Laden, which has quieted charges that Obama is not strong enough to lead a nation at war and facing terrorist threats, high fuel prices may be one of Obama's few vulnerable spots for Republicans to attack.

Obama's new plan follows two previous attempts to expand domestic oil drilling and reduce dependence on foreign oil.

Last year, Obama unleashed a plan to expand drilling off the East Coast and in the Gulf of Mexico -- an attempt to win Republican support for a broader energy and environmental policy. But the BP disaster put that plan on ice.

Saturday's plan follows Obama's call in March to cut U.S. oil imports by a third over 10 years, a goal that has eluded his predecessors.

John Hofmeister, retired president of Shell Oil, the U.S. unit of Royal Dutch Shell, said he was unsure if the administration would carry through with the plan if there is another petroleum-related accident or a steep drop in prices.

Will he stay the course or will some political event cause him to go another way? said Hofmeister, who after he retired founded the not-for-profit Citizens for Affordable Energy, which he said is not funded by oil companies.

We can't sustain an initiative from one political cycle to the next, Hofmeister told Reuters. He said a long-term policy for drilling is needed.

Obama must tread a fine line to avoid angering his base of supporters while demonstrating he is open to drilling.

The question is, where can it be done safety and what system can be put into place to oversee it? said David Goldston, director of government affairs for the Natural Resources Defense Council.

We want to see the details, but in general, it's not a major immediate shift in policy, said Goldston.

(Reporting by Timothy Gardner and Roberta Rampton; Editing by David Gregorio)

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