Obama to Remake Drilling Policies

March 20, 2009— -- As chants of "drill, baby, drill" fade along with memories of $4-a-gallon gas, the Obama administration is taking steps to remake the nation's oil-drilling policies, with energy companies almost certain to gain new access to onshore and offshore sites.

The policy review, part of a broader effort to diversify the nation's energy supply and find new domestic sources, reflects the pressure President Obama is under from those on both sides of the drilling debate.

As the administration balances campaign promises and political realities, both environmental and industry groups are watching closely.

"It's one step forward, two steps back," Charles Drevna, president of the National Petrochemical and Refiners Association, said of the early moves by the Obama administration.

For more on this story, watch "Focus Earth" with Bob Woodruff Saturday.

Wesley Warren, director of programs at the Natural Resources Defense Council, said, "They have made a commitment to really be science-based, to look at all the facts before they make a decision. It is a new way of doing business."

The early signals from Obama and his cabinet agencies speak to that new way. Shortly after taking office, the president reversed orders issued in the closing days of the Bush administration that would have dramatically expanded offshore drilling.

Still, the Interior Department went ahead this week with a long-planned auction of drilling tracts in the Gulf of Mexico.

And Interior Secretary Ken Salazar has indicated in recent days that he's looking for ways to expand offshore drilling in an environmentally conscious way. He has even said he's open to allowing limited drilling at Alaska's Arctic National Wildlife Refuge if it can be done from outside the refuge.

"Oil and natural gas are, and will remain for many years to come, a cornerstone of our nation's energy base," Salazar told the American Petroleum Institute Thursday. "This is not, as some have suggested, a war on the oil and gas industry."

Energy Strategy

The possible drilling expansions come as the president puts together a comprehensive energy strategy that focuses extensively on renewable sources such as wind, solar and biofuels.

Those initiatives remain the cornerstone of Obama's strategies. Industry groups say they're skeptical about the president's commitment to authorizing new drilling.

Drevna of the National Petrochemical and Refiners Association said he's concerned about Obama's "anti-oil-refining-industry rhetoric," the suggestion that big energy companies should face higher taxes as the nation shifts toward renewable sources.

"It is this talk about energy independence; it's not achievable, and it probably is not desirable," Drevna said. "Energy independence means energy isolation, and we simply cannot afford it if we expect the economy to grow."

He is particularly critical of the president's plan for about $30 billion in new taxes and fees on oil companies, money that would be derived by closing what the Obama administration labels tax loopholes.

"We believe forcing oil companies and natural gas refiners to pay more taxes on top of what we are already paying is exactly the wrong way to go," Drevna said.

Meanwhile, some people in the environmental community are wary of efforts to authorize new drilling.

"Opening up sensitive areas to production that we don't need to extends our addiction to oil, doesn't end our addiction to oil," Warren said.

But groups generally accept the political need for further domestic oil exploration. And after eight years of an administration that pushed aggressively for more production -- not to mention a campaign in which drilling literally became a campaign slogan -- Obama's fresh approach has been welcomed in some quarters.

"What this administration and the Department of Energy have said is, 'Everyone take a deep breath. Let's really think about what needs to be done and for America's energy future,'" Warren said. "We now can have a reasonable political conversation about what the science tells us what should be done."