Those who disparage offshore drilling -- and seem eager to ban it -- ignore that the Gulf of Mexico accounts for one-third of U.S. oil production. Without domestic production, we would be spending even more on imported oil -- which is already running $1.5 billion a day.
Any sensible response to the explosion on the Deepwater Horizon oil rig -- and the huge oil spill that's fouling gulf waters -- needs to recognize two facts. First, the demand for oil is expected to increase. Second, America cannot suddenly stop offshore drilling.
The best place in the United States to find new oil is in the gulf's untapped deepwater areas, in the Atlantic, and off Alaska. These three drilling areas combined hold as much as 22 billion barrels of oil, which is more than our current total estimated reserves. This oil would help meet U.S. energy needs for decades.
But if these areas are closed to oil production, we would need to import more oil from overseas, probably from countries that are nationalistic and, in some cases, hostile. Some of the countries are run by despots like Venezuela's Hugo Chavez.
The reality is that the cards are stacked against us. U.S. investor-owned oil companies hold only 6 percent of the world's petroleum reserves, while state-owned national oil companies in Venezuela, Iran, China, Nigeria, India, Russia, Saudi Arabia and other countries control 80 percent of the reserves. Coincidentally, even some of these countries are drilling for oil in Cuban waters 50 miles from Florida.
The Gulf of Mexico is among the best areas to which U.S. companies still have access. Drilling for oil in the gulf is an opportunity we cannot afford to squander. Our energy security and economic growth depend on it.
Producing oil safely is essential. The offshore rig explosion that cost the lives of 11 men and now threatens the gulf shores was such a shock that it has restarted a national debate on safety.
To its credit, the Obama administration has mounted a coordinated response to the accident. One is to break up the federal Minerals Management Service, the agency responsible for both regulating safety and raising revenue from offshore drilling. Creating a separate entity to oversee safety and environmental responsibilities is sensible.
Meanwhile, the oil industry has established two task forces to examine its own safety standards and procedures. We can expect oil firms to learn useful lessons from the accident, keeping in mind that any form of energy development poses safety and environmental challenges that must be faced, resolved and overcome.
It's an unfortunate fact that no energy source is perfect. Imposing a ban on offshore oil development would be a mistake of historic proportions.
The fact is, before the Deepwater Horizon capsized there had not been a large oil spill from an offshore drilling rig in 40 years. The National Research Council reports that offshore drilling accounts for only 1 percent of the oil in U.S. waters, and tankers and pipelines only 4 percent.
By way of comparison, one-third of the oil in U.S. waters comes from other shipping, and 62 percent from natural seepage through the ocean floor.
Nevertheless, some politicians will be tempted to call for a moratorium on offshore drilling. A more measured, less politically galvanizing response would achieve the best results. The question isn't whether to drill offshore, but how to do it more safely.
There is a simple relationship that ties a nation's economic prosperity to its energy availability, and that's why government should not prevent the development of our energy resources. The oil industry accounts for a whopping 7.2 percent of GDP and 9.2 million American jobs -- something we should keep in mind as we debate the future of offshore drilling.
Contact Perry, a professor of finance and business economics at the University of Michigan's Flint campus and a visiting scholar at the American Enterprise Institute in Washington, at Mark.Perry@aei.org.