Washington (Platts)--16Jun2008

US Senator John McCain, the presumptive Republican presidential nominee,
on Monday said that if elected, he would lift a presidential moratorium on
drilling for oil and natural gas on the Outer Continental Shelf. He said he
favors allowing states to determine whether they should permit offshore energy
development.

Drilling on most of the OCS is prohibited both by a presidential
moratorium and by a congressional moratorium that has been renewed as part of
the annual Department of Interior appropriations bill for nearly three
decades.

McCain's statement reiterates his earlier position and represents
something of a middle ground within his party, where some have called for
drilling in federal waters even in the face of state opposition.

His views represent a middle ground on the issue. Some within his own
party have called for drilling in federal waters regardless of state approval,
while many Democrats favor retaining existing moratoria.

"Perhaps providing additional incentives for states to permit exploration
off their coasts would be very helpful in the short term in resolving our
energy crisis," the Arizona Republican said at a news conference in
Arlington, Virginia. "We've seen the impact of it in the form of food prices,
in the form of gasoline, and in the form of threats of inflation, and indeed
indications of inflation."

McCain said he would outline the proposal further in a speech on energy
and the environment he is scheduled to deliver in Houston on Tuesday. His
comments come as oil hit an intraday high of $139.89/barrel Monday and the
national average for a gallon of regular gasoline is above $4.

Presumptive Democratic nominee, Senator Barack Obama of Illinois, has
said that he would keep the drilling moratorium in place.

--Alexander Duncan, alexander_duncan@platts.com