Should the U.S. Allow Offshore Oil Drilling?

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The MMS reports more than 4,000 active platforms in the OCS areas of the Western and Central Gulf of Mexico. In fact, this activity accounts for about a quarter of our nation’s domestic oil supply and about 15 percent of our natural gas. Even so, oil companies hold undeveloped leases in these areas, so it has been argued that new areas of the OCS should not be opened. This is not a well-reasoned thesis. To begin with, some areas currently under moratorium may contain better targets for oil and gas exploration, so opening them would ultimately provide more supply than if companies were limited to drilling on existing leases. In those areas where leases are currently held, oil company assessment of the acreage may not indicate commercial quantities of oil and gas, meaning the lease will remain undeveloped. In other cases, leased acreage may be currently under study, but drilling, which may happen eventually, has not yet begun. If oil companies were hoarding leased acreage, as has been claimed by some, they would be heavily penalized by shareholders for paying for unused leases, not realizing reserve appreciation, and failing to identify drilling opportunities.