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Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., a boutique investment advisory firm based in San Antonio that manages domestic and offshore funds specializing in the natural resources and emerging markets sectors. The company’s no-load mutual funds include the... More
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  • More Offshore Drilling Makes Sense 1 comment
    Apr 1, 2010 9:17 AM

    Oil Exploration 033110

    President Obama proposed plans today to open areas along the coasts of Virginia, the Carolinas, Georgia and northern Alaska for offshore oil and gas exploration.

    This follows the president’s step to restart the nuclear power industry by making $8 billion in loans available for a plant in Georgia. Also today, the president said he wants to double the size of the federal fleet of hybrid vehicles, and federal funds have been allotted for a range of alternative energy projects.

    Diverse sources of energy are important, but the administration also recognizes reality – that oil and gas will be the foundation of U.S. energy demand for many years to come, and for that reason, we have to boldly seek out new sources of domestic supply.

    Offshore drilling has been banned since 1981 for most of the U.S. coastline, but it seems that’s where the deposits are. The outer continental shelf (mostly Gulf of Mexico) now accounts for nearly 30 percent of U.S. oil production, up from 11 percent in 1990.

    Today’s announcement will elate those who have been pushing for more offshore production, but it’s important to remember that any drilling in these waters would not begin for years.

    The impact may be felt sooner in certain segments of the oil and gas sector. Jack-up drill rigs and offshore platforms — in high demand and short supply less than 18 months ago — may see renewed demand. In addition, new pipelines and other infrastructure would be needed to make production in these new areas economically feasible.

    By clicking the image link, you will be directed to the New York Times website. U.S. Global Investors does not endorse all the information supplied by this website and is not responsible for its content. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.



    Disclosure: No positions
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  • James Levy
    , contributor
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    Thanks for this informative article Frank. This should have been the President´s first act upon taking office. Too bad so much time has been wasted with more important issues like trying to close Guantanamo Bay or forcing the health care insurance bill down our collective throats.

     

    Why no drilling on the West Coast? Is the Left Bank not ready for the pragmatist conversion just before the midterm elections? Why close off drilling in large areas of Alaska? Why only allow drilling offshore at great distances from the coast? The President´s proposal is too little, too late. Nothing more than a political ploy. The last thing President Obama really wants is for the United States to have secure domestic oil supplies. Isn´t oil the great threat to humanity due to global warming? Don´t we have to break our addiction to fossil fuels? He doesn´t fool me or millions more Americans who will express our opinion at the midterms and in 2012.
    1 Apr 2010, 12:31 PM Reply Like
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