E&E Daily reports ($ub. req’d) Tuesday that “Senate Majority Leader Harry Reid (D-Nev.) hopes to bring three competing energy packages to the floor next week that include wider offshore oil and gas drilling.” I think the key is that any proposal brought up must marry “opt in” offshore drilling with a serious extension of renewable energy tax credits (plus incentives for plug-ins). It should partly pay for itself by closing oil industry loopholes. That, of course, is what the "Gang of 10" bill does, and Reid said that will be brought up.
Reid should not allow a vote on just more drilling. It would be criminal to let the renewable tax credits expire this year — especially given the "Gang of 10" bill already signed off on the five-year extensions. Here are excerpts from the article:
One of the bills would be a measure Sens. Jeff Bingaman (D-N.M.) and Max Baucus (D-Mont.) are drafting that would include outer continental shelf drilling provisions, Reid said. The plan would expand drilling into the eastern Gulf of Mexico as close as 50 miles from Florida.
Bingaman said it may also allow drilling in other coastal areas but added the measure is still being worked on. Current drilling restrictions cover both coasts and the eastern gulf.
According to Reid’s office, the Bingaman-Baucus plan will also require “diligent” development of current leases that oil companies hold and extend several renewable energy and efficiency tax credits, paying for them by repealing oil industry subsidies. Other provisions would include the repeal of royalty waivers and enactment of national efficient building codes.
Another measure to be brought up will be the so-called Gang of 10 plan that blends wider drilling with higher taxes on oil companies, which would help pay for extended renewable energy credits and tens of billions of dollars in other investments in alternative energy and conservation. It includes provisions to support coal-to-liquids plants and expanded nuclear power.
It would allow drilling as close as 50 miles from Florida’s gulf coast. It would also allow drilling in the Atlantic Ocean more than 50 miles off the coast of four Southeastern states — North and South Carolina, Georgia and Virginia — if their state governments want it. The states with offshore production would also receive a royalty share.
There are currently 16 formal supporters of that plan — equally divided between the parties — and Sen. Kent Conrad (D-N.D.), one of the leaders, said yesterday that five more Democrats have expressed interest in joining.
The bill would repeal the Section 199 deduction for major integrated oil companies. A draft in circulation would also impose a severance tax on oil and gas produced in the Gulf of Mexico. But it allows a credit against this tax for royalties paid. This effectively would require payments from late 1990s Gulf of Mexico deep water leases that are currently allowed royalty waivers — called “royalty relief” — regardless of energy prices.
The bill will include other revenue-raising provisions, but the sponsors of the measure have not yet identified what they will be. Conrad told reporters yesterday that backers have been talking to the Finance Committee about other offsets beyond the oil industry revenues, but he did not provide specifics.
The total package of credits, funding for alternative energy programs and other measure will cost more than $80 billion, sponsors said when they announced the plan roughly a month ago. However, Conrad told reporters that some of the tax credits specifically in the plan are less costly than was originally believed.
Higher taxes on oil companies are drawing GOP attacks on the Gang of 10 plan. Many GOP lawmakers also want more expansive offshore drilling measures.
“I am against it, personally,” said Sen. Kay Bailey Hutchison (R-Texas), who chairs the Republican Policy Committee and is generally aligned with other GOP leaders including Minority Leader Mitch McConnell (R-Ky.) on energy policy. “It does not have significant drilling and it is a huge tax increase,” she said yesterday.
Reid also said there could be votes on a Republican drilling plan. But it is not clear how many amendments they would be allowed or in what form, an issue that became a point of dispute during efforts to move forward on energy legislation before the August recess. An aide said there could be “several” GOP amendments.
(Again, Reid should not allow a vote on just more drilling.)
The bills Reid said would be considered next week would technically be amendments to legislation on curbing oil market speculation that stalled before the recess.
However, Conrad said the underlying bill would not address oil market regulation. “The speculation provisions are going to be stripped out so that is not an issue. That will be dealt with separately. We will have a chance to have … consideration of the Bingaman proposal, our proposal and whatever the Republican proposal is,” he said.
Republicans still want to use the planned continuing resolution (CR) to push for wider drilling. They say the CR should not include bans on drilling that are normally contained in the Interior Department spending bill. “I would vote against a CR that does not take away the moratorium,” Hutchison told reporters yesterday.
But Reid urged Republicans not to force the issue through the CR, which would continue federal spending beyond the Sept. 30 end of the fiscal year. Plans to push for drilling through the CR has raised the specter of a government shutdown if the sides deadlock over the issue.
“Shutting down the government means that senior citizens stop receiving checks and veterans stop receiving health care. We must not let that happen, and I hope Republicans will work with us on a reasonable process to avoid it,” Reid said.
Earlier this summer, President Bush removed executive-level leasing bans, but congressional limits remain in place. Bush has for weeks been calling on lawmakers to allow outer continental shelf leasing. White House spokeswoman Dana Perino yesterday sidestepped questions about whether the president would veto a CR that includes drilling bans.