Washington (Platts)--4Aug2008

US Senator Barack Obama Monday called for expanded oil drilling in the
US, but only as a part of a broader compromise designed to boost renewable
fuels and low-carbon energy sources in the coming decades.

"Increased domestic oil drilling certainly has its place," the
presumptive Democratic presidential nominee said during a speech in Lansing,
Michigan. "But it's not the solution."

Obama said that in the short term, 70 million barrels of light sweet
crude in the Strategic Petroleum Reserve should be swapped out into the market
for sour crude. He further endorsed expanded drilling in the National
Petroleum Reserve-Alaska as well as working with Canada to build a pipeline to
bring Alaskan natural gas to the lower 48 states.

Domestically, he proposed a $1,000 rebate to consumers paid for by a
"windfall profits tax" on oil companies. Also, pushing a plan from
congressional Democrats, Obama also said oil companies should be forced to
drill on leases where they currently do not.

"These are all short terms steps that we could take," he said. "You need
immediate relief."

Obama had reversed his opposition to new offshore drilling Friday. He did
so just hours after a bipartisan group of 10 senators offered a proposal to
allow additional offshore drilling only in the eastern part of the Gulf of
Mexico and off of Virginia, North Carolina, South Carolina, and Georgia. Their
$84 billion plan also aims to advance renewable energy and low-carbon fuels
aggressively to achieve national energy independence.

"I am not interested in making the perfect the enemy of the good,
particularly since there is so much good in this compromise," Obama said. He
added that he wants to eliminate the country's need for Middle Eastern and
Venezuelan oil in 10 years.

Further portions of his plan include a greenhouse gas emissions market as
well as a pledge to invest $150 billion annually on research and development.

--Alexander Duncan, alexander_duncan@platts.com