Obama to Propose Offshore Oil and Natural Gas Production

Obama administration officials are indicating the president will open much of the Atlantic coast, eastern Gulf of Mexico, and Alaska coast to oil and natural gas production. Areas that will remain closed to natural resource production include the Atlantic coast from New Jersey northward, the Pacific Coast, and the southwest coast of Alaska.

Offshore oil and natural gas production will create jobs, relieve supply constraints, and boost state and federal revenues. These are all worthy goals.

The news is not all good, however. There are indications the Obama administration will use offshore production as a bargaining chip for carbon dioxide restrictions. The negative economic implications of carbon dioxide restrictions will far outweigh the economic benefits of expanded offshore natural resource production. Indeed, carbon dioxide restrictions will immediately suppress oil and natural gas production in the newly opened offshore regions, as consumers will be strongly discouraged from utilizing the carbon-emitting fuel sources.

The Obama Treasury Department has estimated carbon dioxide restrictions may cost the average U.S. household roughly $3,000 per year. Opening offshore regions to natural resource production will benefit the U.S. economy, but nowhere near the $3,000 annual penalty that each U.S. household would have to pay to meet carbon dioxide restrictions.