On Wednesday, President Obama announced a proposal to lift the long-standing ban on offshore oil and natural gas drilling off much of the south Atlantic and north Alaskan coasts, as well as parts of the Gulf of Mexico. The announcement has drawn the ire of critics across the political spectrum. Some on the left are outraged by Obama’s “betrayal” of his environmentalist base, and some on the right have called the extent of new offshore access insufficient. In reality, the policy he outlined will do very little to reduce our dependence on foreign oil, and it will have no effect on oil prices in the foreseeable future. And Obama knows it. From the administration’s perspective, this announcement is about one thing: building support in the Senate for comprehensive climate change and energy legislation.

Studies have shown that offshore drilling will have very little impact on domestic oil prices. In fact, not a drop of new oil from this proposal would be seen for at least seven years, and the modest uptick in production and negligible price dip would not even be felt for two decades. Offshore drilling’s impact on real prices pales in comparison to that which could result from sound financial regulatory reform to curb speculation in commodity futures exchanges, or from putting a stop to the supply manipulation routinely practiced by OPEC in response to the artificially rising demand.

Nevertheless, Republican Sen. Lindsey Graham – who is expected to introduce a bipartisan bill co-sponsored by John Kerry and Joe Lieberman within the next month – has insisted that offshore drilling be part of the energy equation of the future. Obama’s announcement on Wednesday follows similar concessions in recent months to conservative nuclear and coal interests. The administration’s Fiscal Year 2011 budget request included $36 billion for the nuclear loan guarantee program and the stimulus bill included $3.8 billion for carbon capture and sequestration (CCS) research and development. (more…)