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OFFSHORE DRILLING
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Marine Log

August 3, 2008

Gang of Ten could get offshore drilling ban eased

Though calls by President George W. Bush to open up more of the U.S. Outer Continental Shelf for drilling have likely done nothing except make congressional action on the matter more improbable, that could change.

A bipartisan coalition of senators led by Senator Kent Conrad (D-N.D.)--instantly tagged "The Gang of Ten"--has unveiled the "New Energy Reform Act of 2008." It's aimed at laying the groundwork to transition America's motor vehicle fleets to fuels other than gasoline and diesel. To ease gas prices in the interim, the proposal includes significant conservation provisions, consumer tax credits, and responsible measures to increase domestic production--including opening up new areas for offshore oil drilling.

Senator Conrad says he believes the group's compromise energy plan "will generate a groundswell of support among the American people as well as his colleagues in Congress and lead to the development of comprehensive legislation to tackle the nation's energy crisis."

A sign that the proposal might just overcome the partisan split on the issue is that presumptive Democratic presidential nominee Senator Barack Obama has said that he welcomes the bipartisan effort as "an important step in the process of reducing our dangerous dependence on foreign oil."

"Like all compromises, it also includes steps that I haven't always supported. I remain skeptical that new offshore drilling will bring down gas prices in the short-term or significantly reduce our oil dependence in the long-term, though I do welcome the establishment of a process that will allow us to make future drilling decisions based on science and fact." hecommented.

"I've always believed that finding consensus will be essential to solving our energy crisis, and today's package represents a good faith effort at a new bipartisan beginning," he said.

His Republican opponent, Senator John McCain, long an opponent of offshore drilling, had a remarkable change of heart a few months back and now says the decision should be left to states, with appropriate incentives to encourage them to permit drilling.

Senators working with Senator Conrad to develop the proposal include: Senator Saxby Chambliss (R-Ga.), John Thune (R-S.D.), Lindsey Graham (R-S.C.), Blanche Lincoln (D-Ark.), Mary Landrieu (D-La.), Johnny Isakson (R-Ga), Bob Corker (R-Tenn.), Mark Pryor (D-Ark.), and Ben Nelson (D-Neb.).

The "Gang of Ten" bill contains three main components:

  • An intensive effort to transition vehicles to non-petroleum based fuels;

  • a robust federal commitment to conservation and energy efficiency; and

  • targeted, responsible domestic production of energy resources.

As part of its effort to increase domestic propulsion, the act would open additional acreage in the Gulf of Mexico for leasing (in consultation with the Defense Department to ensure that drilling is done in a manner consistent with national security) and allow Virginia, North and South Carolina and Georgia to opt in to leasing off their shores. It retains an environmental buffer zone extending 50 miles offshore where new oil production will not be allowed. It also requires all new production to be used domestically. It creates a commission to make recommendations to Congress on future areas that should be considered for leasing and provides for appropriate revenue sharing for states that allow leasing off their shores;

$84 billion in investments in conservation and efficiency in the New Era bill will be fully offset with loophole closers and other revenues. Approximately $30 billion will come from new revenues from the oil and gas industry through such measures as modifying the Section 199 manufacturing deduction for oil and natural gas production and other appropriate measures to ensure that the federal government receives its fair share of revenue from Gulf of Mexico leases.


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