Citing gas prices, oil industry calls for expanded U.S. oil drilling

Citing rising gas prices, the oil industry called on the Obama administration Friday to expand domestic oil-and-gas production.

The call comes as gas prices have reached a two-year high and Republicans are planning to focus on the issue in the coming months to criticize the administration’s offshore drilling policies.

American Petroleum Institute chief economist John Felmy said Friday that the Obama administration needs to set in motion policies that will ensure a robust supply of domestic oil-and-gas resources. 

“So far, the administration’s policies have been focused on renewables, and renewables will play a major role in the future,” Felmy said. But he said renewable energy sources like wind and solar largely produce electricity. Since electric cars have not yet proven successful on a mass scale, the country will continue to rely on oil in the transportation sector.

“If we’re going to be using oil, we should produce it here,” Felmy said, adding later, “What we would request is, let’s look at developing our oil resources here.”

Felmy called on the administration to overturn what he called a defacto moratorium, or “permitorium,” on deepwater drilling in the Gulf of Mexico by immediately issuing new permits for offshore drilling.

And he encouraged Obama to begin planning for the future by expanding offshore drilling on the Outer Continental Shelf as well as onshore.

“There’s a vast amount of oil in the United States that we think we can produce,” he said. “The first thing you can do is start moving forward to get ready for the next couple years.”

But API’s recommendations are going to be a hard sell to the Obama administration, which has made vast swaths of the country’s oceans off-limits to drilling. While API’s call for more drilling is a familiar one, it is likely to garner more sympathy in the Republican house.

House Republicans, including Natural Resources Committee Chairman Doc Hastings (Wash.) and Energy and Commerce Committee Chairman Fred Upton (Mich.), have slammed the Obama administration for instituting policies in the aftermath of the Gulf oil spill that block drilling as gas prices soar. On Thursday Upton called on Obama to address gas prices in his State of the Union address next week.

While Felmy said that limiting U.S. production of oil has some effect on gas prices, he noted that gas prices are largely held hostage to world markets.

“There’s no question that what we’re seeing now is a worldwide phenomenon and the U.S. is part of the world,” he said.