For oil and wind, offshore is promised land – and muddled policy

Extending the naton's oil and gas boom and wind power's technology to coastal waters makes logical sense. But it highlights the contradiction between President Obama's 'all-of-the-above' energy strategy and his environmental agenda.

With oil and gas booming in the United States – and wind energy booming for now – both industries hope to extend their success by moving offshore.

And they’re getting help from the federal government, which on Tuesday auctioned off 80,000 acres along the coast of Maryland for wind development and on Wednesday took bids for oil and gas exploration rights covering 430,000 acres off the Texas coast.

But such moves serve to highlight the ongoing conflict between President Obama’s “all-of-the-above” energy policy and his environmental agenda. Whatever carbon emissions may be eliminated with offshore wind will be more than offset by added emissions from the new deep-sea oil and gas.

“The big question for Obama is: How do we balance the carbon implications of this boom?” says Deborah Gordon, director of the energy and climate program at the Carnegie Endowment for International Peace, a Washington-based think tank.

The two industries that see a potential bonanza offshore are coming at it from opposite vantage points. For the wind industry, any move offshore would help reverse what looks like a bleak future. Although the industry is booming right now, helped along by a wind-production tax credit between 2008 and 2012, the expiration of that credit means that there’s little business in the pipeline beyond next year. Already, US turbine manufacturers are turning to overseas markets to replace anticipated lost business domestically.

The Interior Department’s auctioning of 80,000 acres along the coast of Maryland for wind development concluded with a winning bid of $8.7 million. That’s better than double the amount for a similar offshore wind auction last year.

For the oil and gas sector, however, the move offshore is the logical extension of the onshore energy boom spurred by innovative drilling techniques. Those technologies can be applied underwater. At Tuesday’s auction, the Department of the Interior took bids for oil and gas exploration rights covering 430,000 acres off the Texas coast, with the highest bids reaching $110 million.

America’s oil and gas boom began during the recession, Ms. Gordon notes, meaning the economic benefits of the boom largely eclipsed environmental concerns when the boom began.  Even now, with the US economy recovering from the recession, it would be politically difficult to reject the economic stimulus oil and gas provide.

“The Gulf of Mexico has been and will continue to be a cornerstone of our domestic energy portfolio, with vital energy resources that spur economic opportunities and further reduce our dependence on foreign oil,” says Interior Deputy Secretary Mike Connor in a statement Wednesday.

But environmentalists are becoming more vocal with their concerns. They say Obama’s commitment to offshore fossil fuels undercuts his efforts to combat climate change, and could lead to disastrous spills.

“Any further investment or leasing for fossil fuel development is completely contrary to Obama’s climate action plan,” says Marissa Knodel, a climate campaigner at Friends of the Earth, an international network of environmental groups. “Any leasing and drilling we start now is committing us to decades of emissions that our climate cannot afford.”

The oil and gas industry argues that drilling beneath the ocean floor would strengthen energy security and create American jobs.

“Tremendous potential exists for job creation and energy development in the Atlantic, Pacific, Arctic, and Eastern Gulf of Mexico,” says Erik Milito, upstream group director at the American Petroleum Institute, a Washington-based industry group.

Industry thinks the US should free up even more offshore drilling locations.

“[O]pening new areas to offshore energy exploration and production could create nearly half a million American jobs and raise tens of billions of dollars to help fund the government,” Mr. Milito says.

Doing so may be good politics for the president, considering the economic benefits the country could reap from expanded fossil fuel development.

“His legacy, at this point, is as much economic as environmental,” Gordon says, given that the economic downturn has defined much of Obama’s time in office. “His best chance of keeping his party in power is a good economic story.”