Compromise would open some areas to exploration. A bipartisan group of senators Friday unveiled a compromise energy plan that would open new areas in the Eastern Gulf of Mexico and Southeast Atlantic to oil and gas drilling, while raising taxes on the major oil companies. Hoping to break a stalemate that has kept the nation's energy policy in idle even as gasoline prices soared, the self-styled Gang of 10 would allow producers to explore as close as 50 miles off Florida's Gulf coast.
The oil companies also would be able to hunt for crude 50 miles off the beaches of Virginia, the Carolinas and Georgia — if those states agree.
With its proposal, the group is hoping to send a signal to the markets that "America is serious about becoming independent of foreign oil," said Sen. Saxby Chambliss, R-Ga., a leader of the effort.
The $84 billion New Energy Reform Act would fund an effort — which its backers liken to the Apollo moon landing program — to transform the nation's cars and trucks, with a goal of having 85 percent of new vehicles on the road run on nonpetroleum-based fuels within 20 years.
Excluding oil majors
To pay for their proposal, lawmakers would raise the major oil companies' taxes by excluding them from tax credits that apply to other manufacturers.
"Frankly, there was a lot of dispute at the time it was granted to them," said Sen. Kent Conrad, D-N.D. "Circumstances have changed. With oil at these levels, we don't think that manufacturers' credit is necessary to encourage them to explore and produce oil and gas."
Neither of the major party presidential candidates — Democratic Sen. Barack Obama and Republican Sen. John McCain — is in the Gang of 10.
On the campaign trail Friday, Obama appeared to soften his opposition to offshore drilling.
"My interest is in making sure we've got the kind of comprehensive energy policy that can bring down gas prices," Obama said in an interview with The Palm Beach Post. "I don't want to be so rigid that we can't get something done," Obama is quoted as saying.
McCain supports opening federal waters to drilling, and reiterated his position Friday.
"We need oil drilling and we need it now offshore," he said.
The five Democrats and five Republicans in the Gang of 10 released the energy plan as lawmakers were leaving the capital for the start of their August recess and just two days after a bipartisan group in the House offered its own, even more extensive offshore drilling plan.
Energy has emerged as a major election year issue.
Sticking around in House
On Friday, a group of Republicans in the House protested House inaction on energy by refusing to leave the House floor for more than five hours after the chamber adjourned for the summer, McClatchy Newspapers reported.Rep. Ted Poe, R-Humble, one of the revolt's ringleaders, told McClatchy it was sparked by the refusal of House Speaker Nancy Pelosi, D-Calif., to allow House floor votes on drilling. At its peak, 47 Republican representatives spoke in a dimmed chamber without microphones while hundreds of visitors filled the House chamber and the galleries.
The Gang of 10 proposal would encourage states to allow drilling off their shores by sharing some of the federal offshore royalty revenues with the states. But unlike the other four states, Florida would not get a choice on whether to allow drilling off its coasts.
When asked why not, Chambliss said, "It's only a logical extension of what's happening in the Gulf right now. Plus, that area has been identified as an area where resources are available right now."
But the proposal, coming just two years after passage of a carefully crafted compromise that opened a portion of the eastern Gulf, was met by almost immediate opposition from Florida's senators — Democrat Bill Nelson and Republican Mel Martinez.
Nelson has already has told Senate leadership "if anybody wants to drill off Florida, they'll have a fight on their hands," Nelson spokesman Dan McLaughlin said in an e-mail.
Martinez, in a statement, said: "Unfortunately, the proposal would eliminate Florida's 2006 Gulf protections and give Floridians absolutely no voice in determining where exploration could occur."
The Gang of 10 tried to avoid more opposition by limiting the new areas open for exploration, opting not to try to include the West Coast or the East Coast north of Virginia — areas where opposition might have been equally vigorous.
"We've got to start somewhere," Chambliss said. "It doesn't make a whole lot of sense just to open everything up right now and think that ... we're going to have a rush by the folks who do the exploration to go all over America."
The bill's prospects are far from certain. Senate Majority Leader Harry Reid, D-Nev., said the proposal "includes some very good ideas" but added: "I do not agree with every part of it."
Texas' two Republican senators, Kay Bailey Hutchison and John Cornyn, declined immediate comment on the proposal, saying they had not had a chance to study it.
White House spokeswoman Dana Perino said administration officials will "take a look at it and see if there's aspects of it that we could embrace." But President Bush has threatened to veto bills that targeted oil companies for higher taxes.
Karen Matusic, a spokeswoman for the American Petroleum Institute, argued that higher taxes would impede efforts to maximize U.S. energy supplies.
Jim Presswood, energy advocate for the Natural Resources Defense Council, applauded the provisions that would promote use of cleaner fuels. But Presswood worries the offshore drilling provisions could be "disastrous" for coastal communities.
On Friday, light, sweet crude settled at $125.10 a barrel, up $1.02.
Members of the Gang of 10 are hopeful that while lawmakers are back home talking to their constituents over the next five weeks, support for their proposal will build.
"When we come back, we hope that colleagues will have heard from their constituents that something has to be done and done before Congress finishes its business this year," Conrad said.
SOURCE: Houston Chronicle| By DAVID IVANOVICH
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