15 May 2011

Obama does U-turn, will now expand oil drilling

6:46 am on 15 May 2011

US President Barack Obama has made a U-turn by announcing new measures to expand domestic oil production.

Though Mr Obama has previously emphasised the importance of switching to renewable energy sources, he has been facing public discontent over high fuel prices.

In his weekly radio address, he told the nation the expansion would eventually help reduce America's reliance on imported oil and thus bring down fuel prices.

New leases for exploration will be granted in non-protected areas of Alaska and in the Gulf of Mexico, and oil and gas fields in the Atlantic Ocean will be evaluated as a high priority.

At the same time, the President urged Congress to support proposals to end taxpayer subsidies to highly profitable oil companies.

Gulf of Mexico 'core part' of supply

United States consumers have historically enjoyed cheap fuel, but prices have gone as high as $US4 a gallon ($NZ1.34 a litre) in recent months.

Using his address to tell Americans that he understood their concerns about rising prices, Mr Obama pointed out that US oil production in 2010 reached its highest level for seven years.

"But I believe that we should continue to expand oil production in America - even as we increase safety and environmental standards," he said.

Notwithstanding the BP oil spill in the Gulf of Mexico last year, he said the Gulf remained a core part of the country's future energy supply, and new incentives would be offered for onshore and offshore development.

Republicans in Congress have already introduced a series of bills that would expand and speed up offshore oil and gas drilling.