Dems' Offshore Drilling Plan Comes With Catch

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The San Francisco Chronicle

Dems' Offshore Drilling Plan Comes With Catch

by
Zachary Coile

Marilyn Shannon, of Brooks , Or., wears a t-shirt in support of oil drilling during the Republican National Convention in St. Paul, Minn., Wednesday, Sept. 3, 2008. (AP Photo/Jae C. Hong)

Washington - 
Just three years ago Richard Pombo, the cowboy boot-wearing Tracy
Republican lawmaker, faced an outcry from Democrats for pushing a bill
to lift the 27-year-old ban on drilling off the East and West coasts
and let states choose whether to allow oil rigs off their shores.

In a sign of how much the energy debate has shifted in an era of
nearly $4-a-gallon gasoline, virtually the same proposal that Pombo
floated will be introduced on the House floor this month - by
Democratic House Speaker Nancy Pelosi.

But Republicans aren't exactly cheering the new Pelosi proposal. She
plans to tie new offshore drilling to measures that are loathed by the
GOP - such as revoking billions of dollars in tax breaks for oil
companies and forcing utilities to get more of their energy from wind
and solar.

As Congress returns this week for a three-week legislative sprint,
the two parties will face off in a chess match over energy with high
stakes for both the November elections and the nation's energy future.

For weeks, Republicans have dominated the debate by demanding more
domestic drilling. Polls show that strong majorities of Americans
support the idea. It was a leading refrain at last week's Republican
convention in St. Paul, Minn., where delegates chanted, "Drill, baby,
drill."

Beyond drilling

But Democrats believe the GOP may have overplayed its hand by
focusing on drilling when polls also show Americans want the country to
quickly develop new cleaner, renewable energy sources.

"All the Republicans want to talk about, all Sen. (John) McCain has
talked about is drilling," Senate Majority Leader Harry Reid, D-Nev,
said Monday. "I don't oppose drilling, but this isn't a be-all,
end-all. We need a comprehensive approach."

House Democrats are expected to make public their energy bill as
early as this week, but Democratic aides are already indicating it will
include a "state options" plan that would give coastal states the right
to choose whether to allow drilling - and perhaps a share of the
royalties.

To win support from environmentalists, who have long opposed lifting
the drilling ban, Democrats also plan to repeal at least $18 billion in
subsidies to oil companies and shift that money to tax credits for
renewable energy. Democrats also plan to revive a plan, passed by the
House last year, to require electric utilities to get at least 15
percent of their energy from wind, solar, geothermal or other renewable
sources by 2020.

But House Republicans are already complaining that the Democratic
plan would keep too much of the nation's energy locked up. They want to
force Pelosi to allow a vote on their energy plan, which also would
open areas of the eastern Gulf of Mexico and Alaska's Arctic National
Wildlife Refuge to oil and gas exploration.

"Clearly, they're inching toward some sort of domestic supply
component so we have to look at that," said Rep. Joe Barton, R-Texas,
the top Republican on the House Energy and Commerce Committee. "But I
can't imagine accepting a half a slice of bread when the whole loaf is
out there."

Senate Democrats are plotting a similar strategy as their House
counterparts, planning to vote next week on three separate energy
provisions that include both drilling and renewable energy provisions.

Senate amendments

The Senate will vote on an amendment being crafted by Sen. Jeff
Bingaman, D-N.M. and Sen. Max Baucus, D-Mont., that would revoke tax
breaks for oil companies, open areas off the eastern Gulf of Mexico and
the East and West coasts to drilling, renew expiring wind and solar tax
credits and new energy-efficient building codes.

Reid said he also would allow a vote on an energy plan proposed by
the "Gang of Ten," a group of five Democrats and five Republicans, that
would allow drilling off the coast of four states - Virginia, North
Carolina, South Carolina and Georgia - while also revoking tax breaks
for oil companies and offering new incentives for wind and solar,
biofuels, coal-to-liquid fuels and nuclear energy.

Most Capitol Hill insiders believe there's little chance any of the
measures will become law. Congress has a short time to act - it's just
three weeks before the House is set to adjourn. President Bush has
promised to veto any legislation that raises taxes on oil companies,
which he believes would limit production. Oil companies may never let
the legislation reach his desk.

Kevin Book, a senior energy policy analyst at FBR Capital Markets,
said he's betting the only energy legislation that's likely to pass is
an extension of the tax credits for wind and solar, which expire at the
end of the year and are popular with both parties.

"The Republicans could still potentially strike a deal, but it's not
clear whether the Democrats have any incentive," Book said. "They can
paint Republicans as objecting to cutting a deal - particularly as all
the political analysis suggests they are going to come back next year
with the upper hand" by picking up seats in the House and Senate in
November.

Decision time

Both parties are already game-planning for another scenario: On
Sept. 30, the congressional moratorium on offshore drilling and a
similar ban on oil shale development are set to expire. President Bush
already has lifted the presidential moratorium on offshore drilling.

Congress also must move a temporary spending bill by Sept. 30 to
keep the government funded and prevent a government shutdown. Democrats
are expected to include a renewal of the two moratoriums as part of the
spending bill, arguing that the only way they will let the bans lapse
is as part of a broader energy bill that moves the country toward
renewable sources.

But Republicans say they may call the Democrats' bluff and risk a
government shutdown, and then lay the blame at Pelosi's doorstep.

It would be a huge gamble. The last time Republicans took the risk
of forcing a temporary government shutdown - during a 1995 budget
showdown with President Bill Clinton - they faced a major public
backlash and ended up losing seats in the 2006 House elections.

 

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