Opening more of the nation's coastlines to oil and natural gas drilling won't cut energy prices anytime soon. And it won't greatly reduce U.S. dependence on foreign oil.
But it could bring sizable royalties for a handful of states and soften the blow of price spikes.
President Barack Obama on Wednesday said he wants to give the petroleum industry access to the southern Atlantic coastline, the eastern Gulf of Mexico and more of Alaska's coast. He cited the country's growing thirst for energy, its large dependence on foreign energy sources and the need to create jobs as reasons behind the decision.
How would his proposed offshore drilling plan affect energy supplies and prices? What about the economy?
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Q: Would this influence gasoline prices?
A: Very little. Opening restricted areas to drilling would cut oil prices by less than 3 cents a gallon by 2030, which would have little effect on gasoline prices, according to Michael A. Levi, an energy expert at the Council on Foreign Relations.
There would be other benefits, however. The federal government and some coastal states would receive royalties for the oil. Those royalties would help offset the expected rise in energy costs.
Q: Where would companies be allowed to drill, and how much is down there?
A: Oil and gas resources would be developed about 50 miles off Virginia's coast and more than 125 miles from Florida's coast in the eastern Gulf of Mexico. The government will allow oil exploration in the Arctic Ocean. The president doesn't support drilling at Bristol Bay in Alaska because of environmental concerns. He said proposed leases in that area would be canceled.
It's tough to say exactly how much oil and gas lies under the ocean. But if drillers are able to tap as much as the government estimates in the areas to be opened for exploration, they could pump enough to cover a 15-year supply of oil and a 22-year supply of natural gas for the nation.
In the gulf, there is 36 billion to 41.5 billion barrels of undiscovered, recoverable oil and 161 trillion to 207 trillion cubic feet of undiscovered natural gas, according to the Minerals Management Service.
There is 39 billion to 63 billion barrels of oil and 168 trillion to 294 trillion cubic feet of natural gas in eight planning areas in the Arctic and Atlantic oceans that are under consideration for leases from 2012 to 2017.
Q: When would drilling begin, and when would we see oil flowing to refineries?
A: Exploratory drilling could begin as early as this summer in the Chukchi and Beaufort seas in the Arctic. That is only for a preliminary study to determine if those areas are suitable for leases. The Department of the Interior plans to hold sales for leases in the Gulf of Mexico, off Virginia and in Cook Inlet in Alaska by 2012.
It will take years for oil companies to find the right pockets of oil and gas, build deep-water platforms and begin pumping crude to refineries.
Q: Which companies would be most interested in the new areas?
A: A handful of companies have already been looking for oil in the eastern part of the gulf and Alaska. BP, Royal Dutch Shell and ConocoPhillips said they would be interested in moving into those new areas. Exxon Mobil said it is evaluating the proposal.
Shell, which announced Wednesday it had started producing oil and natural gas from its deep-water Perdido operation south of Houston, will be taking an especially close look at the eastern part of the Gulf of Mexico.
BP, which has numerous drilling projects in the Gulf of Mexico, also welcomed Obama's announcement. But a company spokesman wouldn't say whether the company planned to bid for the new leases.
ConocoPhillips said it is going to move forward with plans to drill in the Chukchi Sea. The Houston company has invested $506 million on exploration in the area.