US: July 15, 2008


WASHINGTON - President George W. Bush plans to lift a presidential ban on offshore drilling on Monday to combat soaring energy prices, a largely symbolic move unlikely to have any short-term impact on the high cost of gasoline.


With prices at the pump over US$4 a gallon, Bush has been pushing the Democratic-controlled Congress to expand offshore drilling and give oil companies access to the Arctic Wildlife National Refuge amid strong opposition from environmentalists.

High gasoline prices and soaring food prices have irked American consumers in a presidential election year, when Bush's Republicans are trying to keep the White House and wrest control of Congress from Democrats.

Bush's move is largely symbolic because Congress also has a ban on offshore drilling and while it expires on Sept. 30, it could be renewed. Government officials also say it would take years for any oil to be produced in those areas.

White House spokeswoman Dana Perino said initially the president wanted to move in concert with Congress but decided to go ahead alone after being rebuffed by Democratic leaders and because of a relentless upward spike in energy prices.

"It has been nearly a month since the president urged the Congress to act to expand environmentally-friendly and responsible exploration for American energy," Perino told reporters.

"Congress has not moved forward despite calls from constituents and the continued pressure of record high energy prices," she said.

Bush is due to announce his decision and make a statement on energy needs at 1:30 p.m. EDT (1730 GMT).

Democratic White House hopeful Sen. Barack Obama's campaign quickly condemned the move. "It would merely prolong the failed energy policies we have seen from Washington for thirty years," spokesman Bill Burton said.

His Republican rival John McCain said he supports the president's decision. He recently reversed his previous opposition to offshore drilling to say the states should decide whether to pursue it, and repeated that stance on Monday.

Even if more Democrats in Congress backed lifting the ban, it would be unlikely they would buck their presidential candidate ahead of the November election.


NO SHORT-TERM RELIEF IN SIGHT

Despite the hurdles, stocks of offshore drilling companies rose, including Noble Corp. up 1.4 percent and Hercules Offshore Inc. up more than 3 percent. August crude oil was down slightly to US$144.90 a barrel in midday trading on the New York Mercantile Exchange.

The US Energy Department's forecasting arm has said opening the Pacific, Atlantic and eastern Gulf of Mexico regions to drilling "would not have a significant impact on domestic crude oil and natural gas production or prices before 2030."

Based on data more than 25 years old, the department estimates that drilling on closed federal tracts off the US coasts could produce 18 billion barrels of oil and 76 trillion cubic feet of natural gas.

Congress has blocked many attempts to allow updated surveys on the amount of oil and gas reserves in the banned areas.

If both the presidential and congressional bans were lifted, it would then be up to individual states to permit drilling off their shores, Perino said. Florida's Gov. Charlie Crist has expressed support for drilling while California's Gov. Arnold Schwarzenegger has opposed it.

"There's a lot of things that would need to be worked out," Perino said. "And both the legislative ban and congressional ban need to be lifted in order for us to move forward to try to develop more sources here in our own country."

Bush's move was immediately condemned by environmentalists who said drilling would not end US dependence on oil or cut the prices at the pump.

"The solutions to this problem are not off our coasts," Athan Manuel, director of lands protection for Sierra Club, said. "The US does not contain enough oil to influence the world market."

The presidential offshore drilling ban was instituted by Bush's father, George Bush, in 1990 and was later extended by President Bill Clinton and was set to expire in June 2012. Most offshore drilling is allowed in the Gulf of Mexico, off the coasts of Texas, Louisiana, Mississippi and Alabama, but not Florida.

"The president cruelly is misleading Americans for attempted political gain," said Sen. Bill Nelson, a Florida Democrat. "He knows ruining our coastlines won't bring down gasoline prices nor solve our energy challenges."

(Editing by Philip Barbara)


Story by Jeremy Pelofsky and Tom Doggett


REUTERS NEWS SERVICE