Relatively low taxes have kept pump prices far below most other developed nations, which some say is precisely why the current runup is so painful.
Despite daily headlines bemoaning record gas prices, the U.S. is actually one of the cheaper places to fill up in the world.
Out of 155 countries surveyed, U.S. gas prices were the 45th cheapest, according to a recent study from AIRINC, a research firm that tracks cost of living data.
The difference is staggering. As of late March, U.S. gas prices averaged $3.45 a gallon. That compares to over $8 a gallon across much of Europe, $12.03 in Aruba and $18.42 in Sierra Leone.
The U.S. has always fought to keep gas prices low, and the current debate among presidential candidates on how to keep them that way has been fierce.
But those cheap gas prices - which Americans have gotten used to - mean they feel price spikes like the ones we’re experiencing now more acutely than citizens from other nations which have had historically more expensive fuel.
Cheap gas prices have also lulled Americans into a cycle of buying bigger cars and bigger houses further away from their work - leaving them more exposed to rising prices, some experts say.
Price comparisons are not all created equal. Comparing gas prices across nations is always difficult. For starters, the AIRINC numbers don’t take into account different salaries in different countries, or the different exchange rates. The dollar has lost considerable ground to the euro recently. Because oil is priced in dollars, rising oil prices aren’t as hard on people paying with currencies which are stronger than the dollar, as they can essentially buy more oil with their money as the dollar falls in value.
And then there’s the varying distances people drive, the public transportation options available, and the different services people get in exchange for high gas prices. For example, Europe’s stronger social safety net, including cheaper health care and higher education, is paid for partly through gas taxes.
Gas price: It’s all about government policy. Gasoline costs roughly the same to make no matter where in the world it’s produced, according to John Felmy, chief economist for the American Petroleum Institute. The difference in retail costs, he said, is that some governments subsidize gas while others tax it heavily.
In many oil producing nations gas is absurdly cheap. In Venezuela it’s 12 cents a gallon. In Saudi Arabia it’s 45.
The governments there forego the money from selling that oil on the open market - instead using the money to make their people happy and encourage their nations’ development.
Subsidies, many analysts say, are encouraging rampant demand in these countries, pushing up the price of oil worldwide.
In the U.S., the federal tax on gas is about 18 cents a gallon, pretty low by international standards.
But those relatively low gas taxes make it hard now for Americans to deal with gas prices that have risen from around $1 to over $3 a gallon in the last seven years.
“Everybody pays more, but the U.S. pays more in absolute terms,” said Lee Shipper, a visiting scholar at the University of California Berkeley’s Transportation Center. If you’re already paying $4 in taxes, said Schipper, then an extra $2 a gallon isn’t that big of a deal.
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Revenues from Europe’s high gas taxes are used to fund a variety of things. One thing they have built is better public transportation, said Peter Tertzakian, chief energy economist at ARC Financial, a Calgary-based private equity firm.
They gave people an alternative to driving, something we don’t have in North America,” said Tertzakian.
Low fuel taxes and prices sprung out of a national love for mobility going back generations, said Robert Lang, director of the urban planning think tank Metropolitan Institute at Virginia Tech.
In fact, the U.S. could not have had the western expansion it did without the cheap mobility railroads and horse carriages afforded long before it became an auto-obsessed culture, said Lang.
“You couldn’t have Manifest Destiny unless you could move,” he said.
The automobile, and its promise of personal mobility, only deepened the nation’s love affair with travel.
“Nobody sang ‘She’ll have fun fun fun until her daddy takes the tokens away,’” said Lang. ‘It’s totally romanticized.”
Gas consumption Europe vs. U.S. There is some evidence Europe’s high gas taxes have capped its oil consumption.
Oil use in the United Kingdom has basically stayed flat from 1980 to now, while in France it’s dropped 17%, according to figures from the Energy Information Administration.
In the U.S., meanwhile, oil use is up 21% over the same period, although the country has added more people and seen its economy grow slightly faster.
Americans have taken advantage of cheap gas prices to do other things - like buy bigger cars and bigger houses further away from city centers, said Schipper.
On a per capita basis, Americans use three times more oil than Europeans, he said. That means Americans are more exposed to rising gas prices than their counterparts across the Atlantic.
“Five-thousand square feet in the suburbs, that’s much rarer in Europe,” said Schipper, referring to big homes. “We dug our hole.”
WASHINGTON (Reuters) - Democrats and Republican lawmakers in the U.S. Senate on Thursday set the stage for a divisive energy policy debate with two dueling party-line bills to combat high gasoline prices.
With Senate Democrats promising to unveil a new proposal to tame record-high U.S. pump prices averaging $3.60 a gallon on Friday, Republicans rolled out their proposal that would open a small portion of the Arctic National Wildlife Refuge to oil drilling, among other things.
“Talk is cheap, but gas is not,” said Senate Minority Leader Mitch McConnell, flanked by 11 other Republicans.
The GOP proposal will compete with a Democratic version which Majority Leader Harry Reid is expected to detail on Friday.
Reid has said he wants to call a vote on a new energy package by late May, before lawmakers depart for their home states for a Memorial Day holiday recess and face voter ire over gasoline prices.
Both parties seem to agree on a proposal to require the federal government to stop filling the U.S. emergency crude oil reserve until oil prices fall from current levels of more than $110 a barrel.
Beyond that, the Republican plan is heavy on supply-side ideas which could tap up to 24 billion barrels of new oil supply. Democrats have traditionally leaned toward demand-side energy solutions like fuel-efficient cars.
“What we are hearing from the White House and from the Republicans is the same song, same dance: drill in the Arctic National Wildlife Refuge,” said Sen. Patty Murray, Washington Democrat. “We know we can’t drill our way out of this problem.”
Several of the Republican proposals — like ANWR drilling and opening more offshore areas to drilling — have been rejected by the Senate before.
However, Sen. Pete Domenici, New Mexico Republican, said lawmakers might see things differently now that crude oil prices have risen more than five-fold since 2002.
“If you voted against it before, take another look at it with oil at $115 a barrel,” Domenici said.
Among other things, the GOP proposal would:
- Allow states to petition the federal government to allow oil drilling off the Atlantic and Pacific coasts;
- Suspend filling the Strategic Petroleum Reserve for 180 days;
- Require production of 6 billion gallons of coal-derived transport fuels by 2022;
- Repeal a 1-year moratorium on drilling in oil shale regions in Colorado, Wyoming and Utah;
- Repeal previous legislation prohibiting federal agencies from using alternative fuels that emit more greenhouse gases than conventional sources, which has been viewed as a de facto ban on U.S. government use of fuels refined from the Canadian oil sands.
Oil prices have fallen on expectations that oil giant Exxon will restart production following the resolution of a strike in Nigeria.
The eight day strike contributed to near-record high oil prices after the company was forced to almost completely shut down production in Nigeria.
US light, sweet crude was down $2.53 at $110.46 a barrel. In London, Brent crude was $2.22 lower at $109.14.
Last week, oil was trading at almost $120 a barrel in New York.
The weakness of the dollar has led many investors to put their money into commodities like oil, pushing up the price significantly in recent months.
The strengthening of the dollar this week has prompted investors to shift out of the commodity, contributing to the downward trend of prices.
But some traders fear it may only be temporary.
“It’s all about the dollar,” said James Cordier from Liberty Trading Group. “[And] I don’t think the dollar is going to stay strong.”
Data on Wednesday that showed US crude oil inventories had increased significantly also lowered prices.
The strike in Nigeria stopped virtually all of Exxon’s daily oil production there of 800,000 barrels per day.
“We have agreed to go back to work and we signed an agreement this afternoon,” said Olusola George Olumoroti, head of the union involved in the dispute.
He said Exxon had agreed to improve pensions and pipeline safety, and reduce the expatriate and casual labour it employs.
Discussion on the issue of pay is expected to resume once production has restarted.
SINGAPORE - Oil prices retreated further Friday from the early week record near $120 a barrel as a strengthening U.S. dollar prompted investors to exit the market.
As the greenback has recovered this week against the euro and yen, the front-month crude futures contract on the New York Mercantile Exchange has dropped $8 from its high to oil’s lowest level since April 14.
The dollar’s rise has stripped away some of oil’s appeal to investors who have been betting that the greenback would continue to falter. When the dollar gains ground, commodities such as oil lose their value as a hedge against inflation, prompting selling. Also, a stronger dollar makes oil more expensive to investors overseas.
Light, sweet crude for June delivery fell 61 cents to $111.91 a barrel in electronic trading on the Nymex by midmorning in Singapore. The contract fell 94 cents to settle at $112.52 a barrel on Thursday.
The end of a strike that had cut production at an Exxon Mobil Corp. facility in Nigeria, a major U.S. oil supplier, also gave market participants a reason to sell on Thursday. Oil prices jumped last week and early this week on word of the strike, as well as on a separate labor action in Scotland.
The Scotland action, which ended Tuesday, caused the shutdown of a 700,000-barrel-a-day pipeline system that carries about a third of the Britain’s North Sea crude.
Analysts caution, though, that oil’s swoon could be temporary. The dollar’s protracted decline has been a major factor behind oil’s rise from about $64 a barrel a year ago, and future dollar weakness could easily push crude futures above $120, they say.
The dollar’s recent gains have come on a view that the U.S. Federal Reserve is done cutting interest rates; lower interest rates tend to weaken the dollar. The Fed cut its key rate a quarter percentage point on Wednesday, without giving a clear indication of its future plans. With the benchmark federal funds rate at 2 percent, however, investors sense that the Fed can’t cut rates much further.
In other Nymex trading, heating oil futures lost 0.82 cent to $3.1095 a gallon while gasoline prices dropped 1 cent to $2.8682 a gallon. Natural gas futures fell 5.1 cents to $10.51 per 1,000 cubic feet.
Brent crude futures lost 50 cents to $110 a barrel on the ICE Futures exchange in London.
No. 1 U.S. oil company’s profit and revenue miss estimates, even as it posts second-largest earnings total on record.
NEW YORK — Record oil prices netted Exxon Mobil a $10.89 billion profit in the first three months of the year, sharply higher than a year earlier but short of Wall Street estimates and below what was needed to set a new all-time profit record.
The profit was still enough to be the second-highest U.S. corporate profit on record, falling just short of the record $11.66 billion Exxon Mobil (XOM, Fortune 500) earned in the prior quarter. The profit in that quarter came to $1,385 a second, enough to buy nearly 382 gallons of gas at current prices.
The sheer size of the Exxon profit reported Thursday will still likely attract attention from consumer groups and lawmakers, who have been arguing for higher taxes on oil companies amid soaring gas and oil prices.
“There is something seriously wrong with our economy when Exxon’s record $11 billion in quarterly profits are seen as a disappointment by Wall Street,” Hillary Clinton said in a statement, referring to the fact that Exxon’s shares fell more than 3% Thursday. “I believe we should impose a windfall profits tax on big oil companies and use that money to suspend the gas tax and give families relief at the pump.”
John McCain, the presumptive Republican nominee, also has called for suspending the gas tax, although he has not detailed how he would make up the lost revenue.
Clinton also has a plan to use a tax on oil companies to fund renewable energy, as does her rival Barack Obama, although Obama does not support eliminating the gas tax, saying the idea would do little good.
Several lawmakers in Congress, mostly Democrats, have tried to eliminate oil company tax breaks and use the money to fund renewables.
So far, those efforts have gone nowhere, blocked by lawmakers and the Bush administration, who say higher taxes will result in less domestic drilling and a greater reliance on imported oil.
But with gasoline prices setting a new record every day, the political pressure is mounting on lawmakers to do something.
Why record oil doesn’t mean record profits.
Gasoline prices actually helped Exxon miss estimates Thursday. While nationwide gas prices are at record highs, they have not risen as fast as oil prices.
Gasoline, with a nationwide average of $3.62 a gallon, costs about 20% more than it did a year ago, according to the motorist organization AAA.
But oil, at $113 a barrel Thursday, costs over 75% more than it did a year ago.
Exxon - which makes more gas than it produces oil - saw less profit than expected partly because it has to pay more to buy crude oil.
“Higher crude oil and natural gas realizations, driven by record worldwide crude oil prices, were partly offset by lower refining and chemical margins, lower production volumes and higher operating costs,” Rex Tillerson, the company’s chief executive, said in a statement.
Another reason Exxon missed estimates is that its overall production fell. The company said “liquids production,” which includes oil, fell 6% in the quarter, even excluding things such as OPEC production quotas or seizures in Venezuela.
One analyst said Exxon could be easing production as certain fields, giving them a chance to rest and rebuild pressure - and avoiding posting even higher profits.
“I think Exxon has decided to mask some of their profitability because they don’t want the political risk”, said Robbert Van Batenburg, Head of Global Research at Louis Capital Markets, a brokerage. “Above and beyond this, their results were outstanding.”
Exxon, by the numbers
Exxon posted first-quarter net income of $10.89 billion, or $2.03 a share. That’s up 17% from the $9.28 billion, or $1.62 a share it earned a year earlier, but it missed the earnings per share consensus forecast of $2.14 from analysts surveyed by earnings tracker First Call.
Revenue hit $116.85 billion, up 34% from a year earlier when sales hit $87.2 billion. The revenue was short of forecasts of $124.4 billion.
Exxon spent $8 billion buying back shares in the first quarter. Companies buy back shares to increase the value of the remaining shares outstanding.
Including dividends, the company returned $9.9 billion to shareholders this quarter.
Exxon said it spent $5.5 billion on finding and developing new sources of oil and gas, up 30% from a year ago.
Exxon has been criticized for not spending enough money of finding new oil and - especially - not investing enough in renewable resources.
Exxon has long maintained that it is an oil company, and renewable technologies should be left to renewable energy companies.
Despite Exxon’s investments in finding new oil, the company production declined. In addition to oil production falling, overall production including natural gas fell by 3 percent.
That drop will likely be noticed by proponents of the “peak oil” theory, who contend world oil production has peaked and will run out in fairly short order.
Many analysts - and Exxon executives - say the oil is there, it’s just held in countries not particularly friendly to U.S. oil firms.
The company also paid $9.3 billion in income taxes, $8.4 billion in sales taxes, and $11.6 billion in royalties.
AMSTERDAM, Netherlands - Royal Dutch Shell PLC reported a 25 percent rise in first-quarter earnings on Tuesday, crediting strong increases in oil prices.
Europe’s largest oil company said its average selling price of crude oil leaped by 66 percent to more than $90 per barrel from the first quarter a year ago.
That sent net profit soaring to a record $9.08 billion, up from $7.28 billion. Sales rose 55 percent to $114 billion.
Analysts said the performance was impressive, especially because expectations were already high.
Shell “delivered a very robust overall performance, with all the divisions outperforming the consensus and our estimates,” wrote analyst Alexandre Weinberg of Petercam in a note on the earnings.
“Exploration and production numbers were clearly impressive, in spite of higher industry costs and the weak dollar. … Flow generation from higher hydrocarbon prices might be underestimated for the entire group of majors.”
Chief Financial Officer Peter Voser said on a conference call the company wasn’t investing money in projects that would require oil prices to remain this high to be profitable. “We don’t understand the oil price at this stage,” he said. “The fundamentals will not justify an oil price as we see it at the moment.”
He said the company is wary of predicting prices apart from a long-term upward trend, but said economists had expected demand to slacken in response to the high prices and with the U.S. economy slowing. However, he said that has so far failed to materialize because of continuing growth in the rest of the world.
He cited a mix of other factors pushing up oil prices including the weak dollar, a rush of speculation on commodities, and ongoing political concerns in the Middle East and in Nigeria.
Shares rose 5.4 percent to 26.07 euros ($40.58).
Earnings from oil production rose 52 percent to $5.14 billion, due almost entirely to the price increases. The company said combined production of gas and oil equivalents increased by less than 1 percent to 3.4 million barrels per day, as a 9 percent rise in gas production outweighed a 6 percent fall in oil production.
Stripping out the impact of oil inventories that have risen in value, refining profits would actually have fallen 20 percent, Shell said.
“It seems that better marketing and trading were able to offset the weak refining environment,” Weinberg said, adding that he believes margins have recovered somewhat in the current quarter.
Shell has invested heavily to improve production after a string of setbacks, including an accounting scandal in 2004. More recently, it has faced attacks on its pipelines in Nigeria and a forced sale of part of its stake in a major project on Russia’s Sakhalin Island to a state-run enterprise.
One of its new projects, producing bitumen — a heavy form of petroleum — from oil-rich sands and shale in Canada, is paying off. The company reported the segment separately from oil and gas production for the first time and it showed earnings of $249 million, more than doubling from the same quarter a year ago.
Voser said that the company was also investing in resources in or near the Arctic circle which have been difficult to access in the past because of the cold but “quite clearly we see as one source of energy going forward.”
EDINBURGH, Scotland - Hundreds of workers at Scotland’s only oil refinery on Sunday began a 48-hour strike that has forced BP PLC to shut a pipeline system that delivers almost a third of Britain’s North Sea oil.
BP said it had completed the closure of the Forties Pipeline System by 6 a.m., when 1,200 workers at the Grangemouth refinery in central Scotland walked off the job. The pipeline brings in 700,000 barrels of oil a day from the North Sea to BP’s Kinneil plant, which is powered from the Grangemouth site.
Energy industry group Oil & Gas U.K. said the strike, over pension issues, could cost $100 million a day in lost production.
The main effect of the walkout was likely to be felt by the British Treasury — which relies heavily on taxes from oil production — and at gas stations in Scotland, some of which limited purchases in anticipation of the strike.
The government urged motorists not to hoard fuel, saying there would be enough to go around. It wants to avoid a repeat of scenes in 2000 when motorists were forced to line up at gas stations as truckers angry at heavily taxed fuel brought Britain to a standstill by blockading refineries.
“There is plenty of petrol and diesel in Scotland to meet demand during this period of time,” the government’s business secretary, John Hutton, told the British Broadcasting Corp. “But of course there is going to be a challenge if people change the way that they consume fuel.”
Gas stations in and around Edinburgh were limiting purchases to 20 pounds — equivalent to $40 — per visit Saturday, and lines of cars formed beside some pumps. A number of stations reported they had run out of gas and diesel.
Some Scottish gas stations were charging 1.25 pounds — $2.47 — Saturday for a liter of unleaded, up from about 1.08 pounds — $2.14 — on Monday.
The Scottish government said 72,000 tons of extra fuel was being imported from Europe to help keep the country running.
Prime Minister Gordon Brown said the strike was unnecessary and called for new negotiations between Grangemouth’s owner, the chemical company Ineos, and the workers’ union, Unite. Talks to avert a strike broke down earlier this week.
The refinery strike is one of a series of labor disputes to hit Britain as the global economy weakens.
A nationwide teachers’ strike over pay issues shut about a third of schools across Britain on Thursday as the government tries to clamp down on public sector wage increases due to inflation fears
Brazil oil field could contain 33 billion barrels. Find would become worlds 3rd largest known reserve.
SAO PAULO, Brazil - A deep-water exploration area could contain as much as 33 billion barrels of oil, an amount that would nearly triple Brazil’s reserves and make the offshore bloc the world’s third-largest known oil reserve, a top energy official said Monday.
National Petroleum Agency President Haroldo Lima cautioned that his information on the field off the coast of Rio de Janeiro is unofficial and needs to be confirmed — but his comments sent shares of state-run oil company Petrobras soaring in New York and Sao Paulo.
Petrobras said in a statement that more studies are needed to determine the potential of what could be the planet’s largest oil find in decades. Analysts said the magnitude of the find, if confirmed, could have far-reaching global energy ramifications.
“This would lay to rest some of the peak oil pronouncements that we were out of oil, that we weren’t going to find any more and that we have to change our way of life,” said Roger Read, an energy analyst and managing director at New York-based investment bank Natixis Bleichroeder Inc., which buys and sells stock in offshore drilling contractor Seadrill, a Petrobras contractor.
Lima told reporters that Petrobras “may have discovered a huge petroleum field that could contain reserves large as 33 billion barrels,” amounting to the world’s third-largest reserve, according to his spokesman, Luiz Fernando Manso.
His agency later issued a statement saying the comments were based on a recent report in World Oil magazine and a report last November from Brazil’s Agencia Estado news agency.
Brazilian Planning Minister Paulo Bernardo declined later Monday to discuss the discovery, saying, “It’s better to wait for official confirmation.”
Lima’s agency regulates Brazil’s oil industry, and his initial comments appeared to represent confirmation of what experts have long suspected: That extremely deep exploration areas hundreds of miles off the nation’s coast may hold potentially huge reserves.
Brazil’s current proven oil reserves are 11.8 billion barrels, according to the U.S. Energy Department. The U.S. has 21.8 billion barrels in proven reserves.
“You’re talking about a reserve the size of total U.S. reserves,” said Tim Evans, an analyst with Citigroup Inc. in New York. “It’s a big, big number.”
If proven, the oil in the exploration area called both Carioca and Sugarloaf Mountain by analysts would also be five times larger than the Tupi oil field, whose estimated reserves of 8 billion barrels were announced by Petroleo Brasileiro SA in November. Petrobras also announced a blockbuster find of natural gas in February in an Atlantic Ocean field nicknamed Jupiter.
“More conclusive data about the potential of the discovery will only be known after the conclusion of the other phases of the evaluation process, and the market will be informed at the opportune moment,” Petrobras said in its statement to Brazilian securities regulators after Lima made the comments.
While the potential Brazil find could add significant supplies to a global oil market many see as tight, it would likely take the better part of a decade before any of the oil finds its way to market.
Evans said it’s impossible to say whether more 33-billion-barrel oil fields exist under the sea.
“Nobody really has data on what’s out there in the middle of the ocean,” Evans said.
Petrobras’ American depository shares closed up 8.3 percent in New York, or US$9.33 (euro5.88) to US$122.18 (euro76.99).
The company’s shares went on a wild ride on Sao Paulo’s Bovespa exchange, fluctuating between 2 percent and 7 percent higher and settling up 4.8 percent while the benchmark Ibovespa index fell 0.7 percent.
Oil prices were unaffected by the news. Light, sweet crude for May delivery rose US$1.62 (euro1.02) to settle at a record US$111.76 (euro70.43) a barrel.
NEW YORK - Chevron Corp said on Wednesday its first-quarter exploration and production earnings should rise from the previous quarter on record oil prices, but profits from refining and marketing would remain weak.
The second-largest U.S. oil company said its oil and gas production in January and February was 2.61 million barrels of oil equivalent per day, basically flat with the fourth quarter, as higher international natural gas output offset shortfalls for oil.
Benchmark oil prices averaged a record of about $98 a barrel in the quarter, driving first-quarter earnings higher from Chevron’s exploration and production business. But it said profits refining and marketing business “are expected to remain at the low level recorded” in the fourth quarter.
Los Angeles - A stretch of the Pacific Ocean off California’s wild north coast seems poised to get permanent federal protection from oil exploration and other development, in recognition that the area lies within one of the four richest marine feeding grounds in the world.
The US Senate is expected this week to vote in favor of extending two marine sanctuaries to cover ocean waters off a 76-mile stretch of the Sonoma County and south Mendocino County coasts – a move that would be a major victory for California in its 50-year battle to restrict offshore oil drilling. The House of Representatives approved the measure April 1.
“After decades of struggle, the door has opened to the national significance of this region,” says Richard Charter of the environmental group Defenders of Wildlife. He says 25 years of give and take by oil interests, environmentalists, and politicians have finally aligned, even as public interest in beach protection is rising.
President Bush is likely to sign the bill because of its many supporters, including the National Oceanic and Atmospheric Administration, state and local governments, the fishing industry, conservation groups, and marine scientists, say close observers.
California’s Mendocino-Sonoma region is probably best known for its onshore beauty: soaring redwoods, the rolling hills of wine country, a rugged coastline. But its offshore attributes are no less unique. The natural interaction of wind and water currents brings nutrients up from the ocean floor and distributes them along the California coast – providing sustenance for birds and marine life, including endangered salmon, Steller sea lions, gray whales, and northern fur seals.
A high-profile spill of 58,000 gallons of fuel oil from a tanker that struck the San Francisco Bay Bridge in November – closing fisheries, ending crab season, and fouling beaches – was an added catalyst to the legislation, Mr. Charter and others say. Several members of Congress whose districts were hit by the spill have become sponsors or supporters of the bill in recent months.
“They are more concerned because they’ve realized we really haven’t gotten that much better in cleaning [oil spills] up,” Charter says.
If the legislation is approved, it would double the size of two existing national marine sanctuaries near San Francisco and Marin, called Cordell Bank and Gulf of Farallones.
Before the House approved the measure, Republicans on the Natural Resources Committee had warned it would cut off access to potential future supplies of oil and gas, even as oil prices topped $100 per barrel.
“The industry is concerned about the overall issue of supply versus demand: Every drop of oil we can’t produce domestically from US reserves is replaced by a drop of foreign imports,” says Joe Sparano, president of the Western States Petroleum Association, a trade group. “But … we have respect for what appears to be a very strong and clear signal from the public.”
Others note that California’s opposition to offshore drilling puts more pressure on other domestic oil-producing regions, such as Alaska and the Gulf of Mexico. It’s not known how much oil or gas could lie in the areas that would be newly protected.
“The standoff between environmentalism and energy realities is something this country will have to confront, not at the state level but the federal level, and not just about issues in California but in other areas of the country where we have oil,” says Herb London, president of the Hudson Institute, a Washington think tank.
There has been scant new federal protection of ocean regions in recent years, notes William Moomaw, professor of international environmental policy at the Fletcher School of Tufts University, in Medford, Mass. The last significant move was in June 2006, when Mr. Bush signed a proclamation creating the Northwestern Hawaiian Islands Marine National Monument, which put 140,000 square miles of coral reef ecosystem under the nation’s toughest marine environmental protection.
Enlarging the sanctuaries is of enormous importance to the well-being of the fishing industry, which has been socked by mounting fishing restrictions, says Zeke Grader, executive director of the Pacific Coast Federation of Fishermen’s Associations.