You read that headline correctly. Unfortunately, the Obama Administration is
financing oil exploration off Brazil.
The U.S. is going to lend billions of dollars to Brazil’s state-owned oil
company, Petrobras, to finance exploration of the huge offshore discovery in
Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil’s
planning minister confirmed that White House National Security Adviser James
Jones met this month with Brazilian officials to talk about the loan.
The U.S. Export-Import Bank tells us it has issued a “preliminary commitment”
letter to Petrobras in the amount of $2 billion and has discussed with Brazil
the possibility of increasing that amount. Ex-Im Bank says it has not decided
whether the money will come in the form of a direct loan or loan guarantees.
Either way, this corporate foreign aid may strike some readers as odd, given
that the U.S. Treasury seems desperate for cash and Petrobras is one of the
largest corporations in the Americas.
But look on the bright side. If President Obama has embraced offshore drilling
in Brazil, why not in the old U.S.A.? The land of the sorta free and the home of
the heavily indebted has enormous offshore oil deposits, and last year ahead of
the November elections, with gasoline at $4 a gallon, Congress let a ban on
offshore drilling expire.
The Bush Administration’s five-year plan (2007-2012) to open the outer
continental shelf to oil exploration included new lease sales in the Gulf of
Mexico. But in 2007 environmentalists went to court to block drilling in Alaska
and in April a federal court ruled in their favor. In May, Interior Secretary
Ken Salazar said his department was unsure whether that ruling applied only to
Alaska or all offshore drilling. So it asked an appeals court for clarification.
Late last month the court said the earlier decision applied only to Alaska,
opening the way for the sale of leases in the Gulf. Mr. Salazar now says the
sales will go forward on August 19.
This is progress, however slow. But it still doesn’t allow the U.S. to explore
in Alaska or along the East and West Coasts, which could be our equivalent of
the Tupi oil fields, which are set to make Brazil a leading oil exporter.
Americans are right to wonder why Mr. Obama is underwriting in Brazil what he
won’t allow at home.
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