House gives go ahead on offshore drilling
Bipartisan legislation that would open up U.S. coastal regions after 25-year ban moves to the Senate.
By Steve Hargreaves, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The U.S. House of Representatives approved a controversial bill Thursday that opens up vast stretches of the U.S. coast to oil and gas drilling, paving the way for a reversal of a 25-year ban on energy exploration off a majority of the country's shoreline.

Congressional staffers say the bill will have a harder time in the Senate, which is currently considering a much more modest proposal.

Supporters said the measure was necessary to help bring down near-record oil and gas prices and tap a vital source of reliable domestic energy. Critics said it could pollute beaches, ruin the tourism industry and take the focus off conservation while doing nothing to solve the country's long-term energy needs.

The bipartisan bill, which passed by a 232 to 187 margin, will give individual states the right to allow drilling in the federal waters that extend from 3 to 100 miles off the coast and permanently open the federal waters between 100 and 200 from shore.

Currently, most drilling is allowed only in parts of the Gulf of Mexico.

The bill also provides states an incentive to open waters under their control, as it directs some royalties to state coffers. Currently all royalties from energy extraction in federal waters go to Washington.

The bill targets the natural gas rich Atlantic coast, the Pacific coast and portions of Alaska, and the west coast of Florida.

The total amount of recoverable oil and gas estimated in the areas currently closed is about 34 billion barrels of oil equivalent, according to the U.S. Interior Department. The U.S. uses about 11 billion barrels of oil equivalent in natural gas and oil each year, according to the Energy Information Administration.

Critics of the bill said it takes the focus off longer term solutions to the country's energy problem.

"It continues our addiction to oil in general," Karen Wayland, legislative director for the Natural Resources Defense Council, told CNNMoney.com Wednesday. "What we need is a serious commitment to energy efficiency."

Wayland said stricter efficiency standards on appliances alone would yield savings amounting to three times the natural gas reserves found offshore.

Legislators whose states are heavily reliant on tourism, such as Florida and California, are also concerned unsightly rigs will blight the horizon or pollution will foul the beaches.

But supporters say that's exactly why states will have control over the first 100 miles.

They also say technology to prevent oil spills has improved dramatically, and say the size of the potential oil reserves could replace U.S. imports from the volatile Persian Gulf for years to come.

"Obviously, this is a big deal," Lisa Flavin, a spokeswoman for the American Petroleum Institute, said Wednesday. "It's a constructive step in the right direction."

--CNNMoney.com's David Ellis contributed to this story.


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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.