Federal Lawmakers Poised to Debate Offshore Drilling

By Published On: September 12, 2008

At the federal level, Democrats and Republicans are bracing for a showdown over offshore drilling for oil and gas next week, The Congressional moratorium expires September 30. California’s governor and Senators remain opposed to drilling off their home state’s coast. U.S. Senators will consider at least three different proposals to allow drilling in coastal waters, including a bipartisan compromise bill. Senate Majority Leader Harry Reid (D-NV) declared next week to be “energy week” in the Senate. Competing bills by a bipartisan group called the “Gang of 10,” House Speaker Nancy Pelosi (D-CA), and one sponsored by Jeff Bingaman (D-NM) may be kludged together using amendments. Speaker Pelosi and other House Democrats are crafting a comprehensive energy bill that would permit drilling in federal waters 50 to 100 miles offshore if a state opted in by passing a state law permitting drilling. That would likely exclude California where Republican Governor Arnold Schwarzenegger and Democratic state lawmakers remain opposed to drilling off the scenic coastline. Pelosi’s bill would eliminate $13 billion in tax subsidies to oil and gas companies and require them to pay billions of dollars in unpaid royalties for deep-water drilling leases in the late 1990s. The royalties would be invested in energy efficiency programs and solar, wind, and other renewable energy projects. Pelosi’s bill also would extend renewable energy tax credits that are due to expire the end of the year and create a federal renewable electricity standard. It would require oil and gas companies to “use or lose” their 40 million acres of existing offshore leases, include curbs on market speculators, and promote increased use of natural gas. More than 40 Republican members of Congress rallied on the Capitol steps September 8 to demand that Pelosi schedule a vote on a GOP bill that would lift the bans on drilling offshore and in the Arctic National Wildlife Refuge. Republican leaders in both the House and Senate are pushing to lift the entire ban on drilling in federal waters off the Pacific Coasts, as well as Atlantic Coast and in the eastern Gulf of Mexico. They also remain staunchly opposed to rescinding tax credits for oil and gas companies and imposing more taxes on them for drilling as the Democrats have proposed. The Outer Continental Shelf contains about 77 trillion cubic feet of recoverable natural gas, according to the Interior Department’s Minerals Management Service. More than half of the estimated 18 billion barrels of offshore oil reserves are along the West Coast, primarily off California. Some Republican lawmakers threatened to let the federal government shut down without a budget rather than renew the offshore drilling moratorium, which will likely be attached to the fiscal 2009 appropriations bill. They are urging President George Bush to veto any federal spending bill that renews the offshore drilling ban Republican Presidential candidate Senator John McCain (R-AZ) calls for lifting the 26-year ban on drilling for oil and natural gas in protected federal waters three miles to 200 miles from shore. McCain also wants to expand the use of natural gas to fuel power plants and vehicles by building new gas pipelines. McCain’s running mate Alaskan Governor Sarah Palin stated, “We Americans need to produce more of our own oil and gas, and take it from a gal who knows the North Slope of Alaska: we’ve got lots of both.” Palin also wrote to California Governor Arnold Schwarzenegger recently asking him to veto a bill that would levy a fee on each container ship that calls on a port in the state. She said the fee, which is aimed at funding environmental programs, would raise the price of goods in Alaska. Presidential candidate Barack Obama calls for expediting construction of the stalled Alaska Natural Gas Pipeline, which would deliver nearly 7 percent of the current U.S. natural gas consumption–some of which is expected to reach as far as California. A bipartisan proposal authored by Representatives Neil Abercrombie (D-HI) and John Peterson (R-PA), which garnered 131 co-sponsors in the House, would open more federally protected waters to offshore drilling. The Senate will consider two similar proposals, one by Democratic leaders and a bipartisan bill by the “Gang of 10,” which would allow drilling 50 miles off the Gulf coast of Florida and the southeast Atlantic states. Both proposals would rescind tax credits for oil and gas companies and use the money to fund energy efficiency and renewable energy projects. They also would extend the renewable energy tax credits and include incentives for alternative fuels. A broader Republican bill would lift the entire moratorium and retain the tax credits for oil and gas production. Senate Republicans are expected to filibuster any bill that would rescind oil and gas industry tax breaks, which they contend are critical to spur domestic production.

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