Hurdle crossed between Democrats, Republicans on drilling

The House Republicans’ months-long chorus of “drill baby drill” paid off in political dividends when the Democrats passed an energy bill that included an expansion of domestic oil and gas drilling.

Lisa Bontempo

House Democrats relented to the Republicans’ political pressure and allowed coastal states the option to allow drilling 50 miles from the shoreline. The bill also allows Utah, Colorado and Wyoming to produce oil from shale; expands conservation measures and alternative energy including renewable fuels; allows release from the Strategic Petroleum Reserve to increase market supply and reduce prices, and requires oil companies to drill on leases they already hold or lose the leases.

Democrats hope the bill will quell fears among their ranks of vulnerable Democratic freshmen and the Democratic “blue dogs” from southern states who support drilling and are about to face the voters who are complaining about gas prices.

To appeal to environmentalists and liberal supporters, Democrats also tied the drilling provisions to increased oil company taxes so as to continue to make their populist arguments against big oil. In addition, House and Senate Democratic leaders released a study showing excessive and speculative oil trading activity in the marketplace. Other studies were released from organizations showing no or little impact from speculators.

While the energy bill does not limit commodity speculation, and Republicans argue recent oil market volatility is based on supply and demand, Democrats may have the leg up on this argument on the campaign trail. In light of Wall Street’s woes and recent government bailouts, the voters are nervous. It’s hard to argue that commodities markets should benefit investors over consumers. But remember, today’s 401(k)-driven economy has millions of investors, the voters.

Republican opposition

Even with the drilling provisions, many Republicans continue to oppose the bill. The Republicans had been promoting their own bill that completely lifted the offshore drilling moratorium while promoting nuclear power, coal, oil shale and alternative energy. Republicans’ main objections to the Democrats’ bill include the billions of dollars in taxes on large oil companies to pay for the alternative energy tax breaks included in the bill. Many Republicans also want to see drilling allowed much closer to the shore where most of the oil lies.

Congress has been calling for energy independence for decades. If independence is the real goal, drilling alone won’t get us there. But on the campaign trail, Republicans can now say they forced Democrats to open America’s shore to drilling; Democrats can now say they’ve shown leadership and passed a measure to address rising energy costs.

A different outlook

The Senate is working on an energy tax extenders measure. A bipartisan group of senators is considering a bill to allow offshore drilling for oil, promotion of nuclear power for electricity, alternative motor fuels and tax credits for wind, solar and biofuels. Nothing is likely to reach the president’s desk on energy this Congress. However, a significant hurdle has been crossed between Democrats and Republicans on drilling.

It is best to remember that the debate and political pressure on these measures is designed to win the public’s vote around the issue of rising gas prices in time for the election.

Lisa Bontempo was a longtime energy lobbyist, including 13 years with NPGA. She remains involved in national politics, and can be reached at
lisabontempo@msn.com.