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Analysis: McCain right on offshore oil

By MARTIN SIEFF   |   June 18, 2008 at 11:49 AM   |   Comments

WASHINGTON, June 18 (UPI) -- Sen. John McCain passed UPI's Oil 101 this week with his gutsy call for extending offshore drilling around the United States. Sen. Barack Obama didn't, for betting the house on "clean" energy technologies that don't even exist yet.

McCain, R-Ariz., was obviously motivated in significant part by political calculation and self-interest in making his call, which is in accord with the policy urged by U.S. President George W. Bush. McCain has to shore up the key Republican conservative base, which remains extremely unenthusiastic about his upcoming official nomination as the GOP's presidential candidate this year. And McCain's stands in favor of many environmental issues, such as preventing oil drilling in the Arctic National Wildlife Refuge, have been particularly irritating to them. Also, there was no way McCain was going to "out-green" Obama, D-Ill., on environmental issues, so he might as well go for broke in the other direction.

Finally, with gasoline prices at the pump on average above $4 a gallon across the United States for the first time ever, the time was certainly right for McCain to go out and woo enraged and fearful voters with a hard-hitting, direct and credible plan to increase U.S. domestic oil production.

In fact, neither McCain nor Obama has dared to address the fundamental issues of the soaring global oil costs and the weakening dollar: As long as the dollar remains unattractive and vulnerable to international investors, it will continue to fall and U.S. domestic oil prices will rise accordingly.

The only realistic cure for that problem is a solution Bush has never dared to implement, although in 1981-82 President Ronald Reagan did: Let U.S. prime interest rates soar to the levels they need to be to attract the investment needed to restore international investor confidence and stabilize the dollar, whatever the short-term pain in the U.S. economy will be.

A President Obama, once safely elected, may be more ready than a President McCain steeped in the Panglossian orthodoxies of pain-free, post-Reagan conservative optimism. It is striking that Paul Volcker, the man who broke inflation for Reagan as chairman of the Federal Reserve, is advising Obama rather than McCain.

However, when it comes to what both candidates have put on the table in their energy policies, it is clear that McCain's plans are rooted in reality where Obama's are not. Both candidates want to divert huge sums of money to clean and renewable energy research and development. But Obama is banking on that far more than McCain.

Obama's proposed $150 billion investment plan for renewable, sustainable and alternative energy will play well to generations of suburban and post-industrial Americans raised on Green mythology. But in reality, Obama is proposing an enormous, state-directed investment without the cold self-interest and enforced rationality of the free market to gamble on developing a series of technologies that do not even exist yet.

That is why there is such an element of double-standards and hypocrisy in the mainstream U.S. media criticism of McCain's offshore drilling proposal: Critics argue that McCain's proposal would take years to have a significant impact on U.S. domestic oil production, supply and prices at the gas pump.

All of that is obviously true, but Obama's plan will take far longer to bring energy prices down and provide substitutes for oil, if it ever will at all.

Finally, both concepts should be mutually reinforcing rather than exclusive and antithetical to each other. Any sane American would welcome reducing oil dependence, and there are many technological strategies to do it, starting with pushing rapid development and production of electric-powered cars. A President Obama may well pursue such essential policies more boldly and successfully than a President McCain.

However, the United States remains primarily dependent on oil, coal and nuclear sources for its electrical power generating needs, and overwhelmingly on oil to fuel its trucks and automobiles, and for its huge annual production of nitrate fertilizer and plastics.

These needs are not going to go away overnight, or for years to come, and therefore developing further significant domestic oil reserves to feed them should remain a U.S. national energy security priority. McCain realizes this. He is right do so.

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