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Obama says 'Drill, baby, drill.' Will new oil policy ease gas prices?

President Obama used his weekly address to announce steps designed to promote greater domestic oil production and reduce the burden of high gas prices on American consumers.

The president directed the Interior Department to conduct annual lease sales for drilling in Alaska’s National Petroleum Reserve, "while respecting sensitive areas." He also called for speedier evaluation of oil and natural-gas projects in the resources in the mid- and south Atlantic region, and said his administration plans to lease new areas in the Gulf of Mexico.

OK, he didn't actually utter the words "Drill, baby, drill," a Republican catch phrase. But with gasoline prices acting as a drag on the economy and on the president's reelection prospects, that was his essential message.

Will the policy help lower gas prices?

Obama offered a careful note of caution: "While there are no quick fixes to the problem, there are a few steps we should take that make good sense."

It's true that it can take time for a policy shift to result in a noticeable rise in US oil production. Also, although domestic production is an important source of US oil supplies, gas prices will also depend to a large degree on global market forces that are outside of direct US control. 

Still, a policy change can also have at least a modest psychological effect on energy markets, signaling the prospect of greater supplies in the future.

Whether it takes a long or short time to affect pump prices, some economists say expanded drilling is a good idea for the economy right now.

"More jobs could be created by drilling for more domestic oil now, which would keep money here that American drivers send to the Middle East," University of Maryland economist Peter Morici says in a recent commentary.

Similarly, the National Federation of Independent Business, representing many small businesses, released a statement this week saying that “increasing fuel prices have hit small businesses particularly hard," and that "we commend lawmakers who support energy solutions that help reduce costs on small businesses.” 

The statement came after the Republican-controlled House of Representatives passed the "Putting the Gulf Back to Work Act," designed to end a moratorium on drilling in the area affected by last year's BP oil spill.

Republicans say they have been leading the charge for stepped-up domestic energy production ever since Obama took office, and that his moves Saturday still fall short. 

"Year after year, politicians in Washington talk about steps to ease the pain at the pump, but they never act," Rep. Martha Roby of Alabama said in the Republican weekly address Saturday. "It hit home this spring when the president promoted Brazilian-made energy in Brazil while his administration keeps our resources here at home under lock and key."

Environmental advocates argue that Republican proposals push production at the expense of prudent safeguards. 

"What is truly astounding about these [Republican] bills is that they would actually make the system that governs offshore drilling weaker than it was before the disaster in the Gulf of Mexico,"David Goldston of the Natural Resources Defense Council wrote in a blog post this month. From the Gulf to the Atlantic Coast, he says, the bills seem designed to "prevent any president or other official or the public from ever deciding not to drill for oil everywhere."

In his address, Obama cited other energy-related moves he is taking or proposing:

• "We’re investing in clean energy technology ... and making sure that our cars and trucks can go further on a tank of gas -– a step that could save families as much as $3,000 at the pump," he said.

• The White House has asked the Attorney General to seek cases of possible fraud or manipulation of energy prices, including any illegal activity by traders and speculators

• Obama wants Congress to eliminate tax subsidies for oil companies. He said oil firms have recently been earning about $4 billion in profits each week, yet get $4 billion in taxpayer subsidies each year. 

• He called for new incentives for the industry to develop wells in on- and off-shore areas where leases are currently going unused. 

With gas running at about $4 per gallon nationwide, an April CNN/Opinion Research poll found that 69 percent of Americans favor increased offshore drilling for oil and natural gas.