Bush calls for end of drilling ban

Mr. Bush pressed Congress o Wednesday to lift a moratorium on drilling off the east and west coasts of the United States, which have long been off limits to oil and natural gas firms. Opening up the country's offshore backyard could allow fields holding 18 billion barrels of oil to be developed, easing the economic pain caused by the high price of energy, he said.

Lifting the ban faces staunch opposition from Democrats, including presumptive presidential nominee Barack Obama and House Speaker Nancy Pelosi, who have already rejected the proposals. California Governor Arnold Schwarzenegger, a Republican, also said he would oppose any attempts at development.

Mr. Bush's willingness to press such a controversial measure highlights the stress posed to the U.S. economy by high oil prices, which hit a new record of almost $140 a barrel (U.S.) earlier this week and has placed producers under pressure to boost output.

Saudi Arabia, the world's largest oil producer, has convened a summit to discuss the situation this weekend, which will attract energy ministers and corporate leaders from around the world. Federal Natural Resources Minister Gary Lunn will attend, reversing an unofficial yet long-standing national policy of avoiding such meetings.

For the United States, the world's largest oil consumer, high prices and concerns over supply have been exacerbated by dwindling output by major producers such as Mexico and Venezuela. The weak U.S. dollar is adding to the problem, and helped push domestic gasoline prices above $4 a gallon this month for the first time.

As a result, Mr. Bush – whose views are backed by John McCain, the likely Republican nominee in this year's presidential election – wants the U.S. to reconsider developing regions seen as off limits.

While substantial drilling for offshore oil and gas does take place in the western part of the U.S. Gulf of Mexico, exploration elsewhere – such as off the Californian or Florida coasts – is banned by congressional and executive prohibitions first put in place in 1981. Environmental groups and coastal residents have long opposed more drilling because of concerns about potential oil spills and damage to fragile ecosystems like the Florida Everglades.

Those moratoriums – which are set to expire in 2012 – are “outdated and counterproductive,” Mr. Bush said.

“Unless members are willing to accept [gasoline] prices at today's painful levels or even higher, our nation must produce more oil. And we must start now,” said Mr. Bush, who also called for restrictions on oil shale drilling to be lifted and for more Alaskan acreage to be opened up for development.

For the United States, even imports from reliable partners such as Canada, its biggest oil supplier, may not be enough in the coming years. On Wednesday, the Canadian Association of Petroleum Producers trimmed its 2015-20 output estimates for Alberta's oil sands because labour and materials shortages, along with high costs, are pushing new projects behind schedule.

Companies are confident more oil and gas can be found offshore.

Chevron Corp., a leader in Gulf of Mexico oil and gas production, previously found as much as three trillion cubic feet of natural gas at its Destin Dome project, 40 kilometres south of Pensacola, Fla., before the offshore moratorium was extended to prohibit further development.

“We discovered significant amounts of natural gas, but it became too onerous to develop those,” Chevron spokesman Mickey Driver said. “But we know the resource is there.”

Mr. Driver said Chevron may want to look at Florida again if the moratorium is lifted.

“If everything was equal and we had access, we'd look at any resources made available to us.”