Let's Make a Deal on Offshore Oil?

By: Lowell
Published On: 8/6/2008 12:06:00 PM

That's exactly what energy expert and environmentalist Joseph Romm is arguing over at Gristmill, and I agree with him.

Right now, it seems like conservatives are willing to hold their breath until they turn blue in the face before they agree to move any legislation whatsoever if it does not include coast drilling. Politically, they seem to have a winning argument in part because the media simply isn't policing the debate, even when people like McCain just repeat the lies of the oil industry over and over again. And in national politics, the side who doesn't have to explain their position usually wins.

[...]

I doubt the deal would even generate 50,000 barrels of oil a day 15 years from now. Is it really worth losing any political points in races for Congress or the presidency to (temporarily) hold back under one-thousandth of the global oil supply -- especially when progressives can get something real for it? Of course not. For that reason, though, congressional leaders are to be applauded for refusing to allow a simple up-or-down vote on offshore drilling. Between the 60 votes conservatives are requiring every bill to achieve in the Senate, and Bush's commitment to veto any intelligent energy legislation, conservatives have blocked all efforts to extend the renewable energy tax credits or to enact a renewable portfolio standard, among other crucial pieces of energy legislation.

Time for a deal...

I think Joseph Romm is right. Heck, I say open up ANWR too - under the most stringent environmental conditions, of course - if we can get something on the order of Al Gore's 10-year project to produce all our electricity from non-fossil-fuels.  What do you think?  Should we stick to our guns and probably lose the offshore drilling and ANWR arguments eventually, or should we be proactive and make a deal that gets us everything we want?

By the way, why can't we do the same thing with the Wise County power plant?  Fine, Dominion, you want your damn power plant?  OK, but YOU have to do the following: 1) launch a massive energy efficiency and conservation program that slashes electricity use in Virginia; 2) never build another coal-fired power plant again, anywhere; 3) phase out the other coal plants you've got within 10 years; 4) agree to a MANDATORY renewable portfolio standard of 50% by 2020, 75% by 2025, etc.; and 5) refuse to buy any coal, starting immediately, that has been mined using the abomination known as "mountaintop removal."  How's THAT for a deal, Dominion b****es?


Comments



Absolutely on target! (AnonymousIsAWoman - 8/6/2008 12:22:04 PM)
I believe you are right.  Politics is the art of the possible.  And by agreeing to off shore drilling, but with the stipulations you mention, either we'll get many or most of the things that really will help solve the energy crisis in an environmentally sound way or we will at least make the Republicans look like the intransigent ones who are grandstanding.

If our side shows a willingness to compromise, we come out looking reasonable.  Then their ridiculous antics on the House floor this week will look exactly like the theatrics that it is.



Vindicated? (tx2vadem - 8/6/2008 12:30:46 PM)
Does this mean I get credit for mentioning this should be sacrificial lamb a while back, when it was not a popular idea here?


Everything on the table (floodguy - 8/6/2008 12:33:34 PM)
#1, the GOP have been joined by enough Democrats in Congress for about 60% in favor for increase domestic production.  Let's realize this and be truthful amongst ourselves, it ain't all Republicans.  

#2, why cough up ANWR if OCS is accessible?  The DOI says there is 800,000 bbl per day, enough for 12 years of US demand, in new OCS accessible reserves.  ANWR should be treated as the last bastion.  If under an emergency and needs to be tapped, ANWR should be left for future generations while today other opportunities exist.  

#3, Warner-Webb only want to open the OCS to explore for inventory purposes, while leaving the permit process to its own debate.  For Virginia, OCS natural gas access would be beneficial.  

Regarding your Wise Count concession for Dominion, why not use the compromise the Kansas Governor or the Wisconsin and Nevada state utility commissions hashed out with state utilities, when it allowed new dirty coal plants in those states, instead of the undoable, economic destructive offer you are proposing?



ANWR (Quizzical - 8/6/2008 1:20:32 PM)
I thought the reason they want ANWR is that a field there could be hooked into the existing Alaskan pipeline with a spur line, extending the life of the Alaskan pipeline which has already been paid for.  So the bottom line is that it would be hugely, hugely profitable.  Hence the lobbying for that.  

There should be a windfall profits tax if that field is opened up.



Why a windfall profit tax? (tx2vadem - 8/6/2008 1:35:49 PM)
The oil companies would already be paying royalties to the Mineral Management Service if they got this oil.  You could just set the royalties higher and it would be a more efficient, effective revenue collection process.  


ANWR is the last bastion (floodguy - 8/6/2008 3:11:56 PM)
my position against ANWR is a conservative one.  Why commit to accessing 100% of our available resources today, while leaving no opportunity for future generations in case of an emergency?  This isn't a veiled position, disguising my environmental feelings about ANWR.  Eventually that oil will likely have to be tapped, and unless a miracle happens, my belief is that our consumption will never be petroleum-free.  (I'm not ready to accept the realities of a George Jetson lifestyle.)

Have we run out of options today in the field of domestic fuel production?  No.  There is already drilling offshore, and the results and its harm are more easily visible and interpreted.  Grant the industry the right to fully explore the OCS and obtain the full inventory which is very important to planning.  Then, let the next debate decipher whether to move forward or not.  

If after this energy revolution, and should the nation faces an emergency or another energy crisis, leave ANWR to that generation to tap and solve its problem.   Why handcuff the future, when today we are afforded other options?



Sort of my position too (Pain - 8/6/2008 3:24:14 PM)

Though, I don't think we should drill ANWR now, or ever, but I essentially agree with you.

I've been thinking about this for along time, and have written about it on other blogs, but I'll put it out here too.

There are some things we aren't going to be able to convert away from oil any time soon.  One of them is airplanes.  Why suck all the oil out of the ground now under the incorrect assumption it's going to reduce gas prices immediately, or ever for that matter.  Why not leave some oil in the ground, just in case we need it later, and work really really hard to live with what we have now while doing all we can to get off oil ASAP, to the degree that is realistically possible.



Wind and Solar Groups Seeking Grand Bargain (Lowell - 8/6/2008 3:28:30 PM)
This is fascinating...from today's Congress Daily:

Wind-power advocates are beginning to signal support for a potential grand bargain with oil and gas interests backing expanded drilling rights, if that is what it takes to move a critical tax incentive through Congress this year. In an interview, American Wind Energy Association Executive Director Randall Swisher said it was very encouraging to see the bipartisan "Gang of 10" plan introduced Friday, which combines long-term renewable energy incentives with the opening of additional areas to oil and gas drilling. Swisher said he was pleased that the Democrats' presumptive presidential nominee, Sen. Barack Obama of Illinois, has said he would consider the plan. "We need to recognize that there are a range of energy options available," Swisher said, calling it "depressing" that Congress has not acted to extend the production tax credit for wind and other alternative sources.

Also, check this out?

"The wind industry has been working closely with the Solar Energy Industries Association, which wants to see a separate investment credit extended."



Anything is possible (floodguy - 8/6/2008 4:04:36 PM)
A nation which has a consumption-based economy free of petroleum or free of petroleum from ANWR, is something policymakers should strive for.  I think everyone wants less oil dependency if its possible.  If people harbor views contrary to that, looks what our foreign fuel  dependency is creating.  As we work towards that end, however, we must not abandon today's and our near-term reality.

It should be noted that neither the House or Senante new energy compromises includes tapping ANWR, while focusing on OCS exploration on onland development.  From the Oil & Gas Journal:

Critical challenge
"Our country faces a critical challenge because of skyrocketing energy costs," said Sen. Kent Conrad (D-ND) at the Gang of 10's press conference. "This is not a Democratic issue or a Republican issue. It is an issue that affects all of us. I am committed to working with all of my colleagues in a bipartisan manner to resolve the energy crisis.... We need to act now."

More US production
To increase domestic energy production, the Gang of 10's bill would ensure that it is "responsible" and "targeted." For offshore oil and gas, that means consulting with the US Department of Defense to ensure that leasing and drilling occurs in more of the eastern Gulf of Mexico consistent with national security. It means allowing Virginia (where a 2011 federal OCS lease sale already is scheduled), North Carolina, South Carolina, and Georgia to agree to allow federal leasing off their shores.

A 50-mile environmental buffer zone would be retained where new oil production could not take place, and all new production would have to be used domestically, according to the proposal. States that allow offshore production would receive an appropriate share of revenues, and a commission would be created to make recommendations to Congress on areas to consider for future leasing.

House group's proposal
HR 6709, the bill developed by Peterson and Rep. Neil Abercrombie (D-Ha.) who have cosponsored similar measures, takes a broader approach in its energy production section. It would repeal all federal prohibitions against spending money for onshore and offshore leasing and preleasing activities. Leasing within 25 miles of a state's coastline would be banned, but coastal states could authorize production from 25 to 50 miles offshore within 1 year of the bill's passage.

The 125-mile oil and gas leasing buffer zone in the eastern Gulf of Mexico and appropriations bans on oil shale development would be repealed, but the Interior secretary would have to consult with the Defense secretary to coordinate any leasing. Unresolved issues could be referred to the president, the bill says.

It also would repeal a moratorium on oil shale leasing and prohibitions on federal agencies from entering into contracts for an alternative or synthetic fuel and would allow the use of woody biomass from federal lands for alternative fuel.

The House group's bill specifically allocates shares of the $2.6 trillion it estimates new offshore leasing would produce: 30%, or $780 billion, would go to the US Treasury; 30%, or $780 billion, would go to the affected states; 8%, or $208 billion, would go to a conservation reserve; 10%, or $260 billion, would go to an environmental restoration reserve; 15%, or $390 billion, would go to a renewable energy reserve; 5%, or $130 billion, would go to a reserve for nuclear waste and for carbon capture and sequestration, and 2%, or $52 billion, would go to the Low Income Home Energy Assistance Program (LIHEAP).


"I believe this combination of increasing supply and reducing demand, which this bill does, will reduce our energy costs, along with creating new jobs," Costa said at a July 30 press conference with other cosponsors. "Even more important, this bill provides a framework for moving us toward cleaner and renewable sources of energy, and toward energy independence."

Rep. Thelma Drake (R-Va.) added, "Now, there is a bipartisan solution on the table. This bill gives voice to the beleaguered American public which has said 'enough' and is calling for a comprehensive solution to the energy crisis. It is my sincere hope that the House will take up this bill and allow a vote on the bipartisan energy solution that the American people are demanding."




Agree (Silence Dogood - 8/6/2008 12:39:23 PM)
It's the only thing Republicans want, so we have to make sure that we get everything that WE want in one fell swoop: tax credits for conservation technologies and alternative energy development--partially funded through a windfall tax on big oil and an end or at least a scaling back of subsidies, plus better CAFE standards.  We can't treat this deal like a first step; off shore drilling is the only thing they want, the only thing we have to offer, so once they get it, they're not coming back to the table.

But on the other side of the coin, if it's the only thing they want, we can't give them any other incentives to come to the table, and our country can't afford inaction any longer.  Let's make a deal.



I'm sure this is not all they want (tx2vadem - 8/6/2008 1:56:42 PM)
I think Republicans from Plains States, from the West, and from Texas will also like investments in wind and solar.  If nothing else the chambers of commerce that support them will like that money.  Utilities and the candidates they support will love financing arrangements that help them upgrade their infrastructure and construct new plants.  Auto companies will love credits and investment to help them re-tool all of their factories.  And these companies have influence with both Republicans and Democrats.

CAFE standards are a relic though.  We should be putting them in the dustbin of history at this point.  Because all that will come out of that is some meaningless standard like 36 mpg fleet standards.  Instead, we need to direct money to taking technology that we absolutely have available right now and moving that to the mass production stage.  With the auto industry floundering at this point, CAFE standards aren't going to cut it.  We need to coordinate a strategy that (to borrow a phrase from BP) moves us beyond petroleum in our transportation sector.  And that coordination can't be CAFE because CAFE is not designed to do that.  And we need to help the auto industry achieve this goal.  And as that may pain some, it will mean government lending private industry a hand.

Oh and windfall profit tax, bad idea.  Questionable in the revenue it will produce, arbitrary in its assessment of what constitutes normal profit growth, and discriminatory in its application.  I think I have hit on this a lot; so, I will spare a longer post on this.  But if you really want to discuss it, I am game.  



Windfall... (Eric - 8/6/2008 2:10:19 PM)
Although you disagree with the windfall concept, do you agree with undoing all the perks the oil industry currently receives from the government?  If there was ever an industry that didn't need help, it's the oil industry.   Simply undoing what they get will free up some money to be spent on proactive progressive approaches to energy and transportation.


Sure (tx2vadem - 8/6/2008 2:29:30 PM)
But as I have said before, I want to see it as part of a broader closing of loopholes and elimination of credits and deductions in the corporate tax code.  What Democrats in Congress are talking about getting rid of is the Domestic Manufacturers Tax Deduction as it applies to oil companies.  Why not eliminate this ridiculous deduction all together?  It was just created to offset another credit we were giving because the WTO ruled the export tax incentive we were giving to be barred by WTO rules.  So, why have it at all?  It's just a hand out to all corporate tax filers.  Get rid of it for everyone of them.


Agree to a point; we need some drastic ideas (Ron1 - 8/6/2008 2:48:50 PM)
CAFE standards may be a relic, but they work in forcing the market to conserve oil by the constraints imposed on the automakers.

But if you want to argue that our dependence on foreign oil, the amount of money in our economy now being spent on energy (at the expense of all other expenditures), and the VERY large contribution that our oil gluttony makes to global warming are all essentially emergencies (which I would argue we're at that point now), it's within the scope of Congress to come up with a fair scheme by which the patents holders for hybrid technology are compensated and the patents are essentially taken and made public domain. Imagine a Congress that said that, within five years, ALL automobiles currently on the road would be converted to hybrids and that within 7 years all new cars would also be hybrids.

It would create jobs, incentives for entrepreneurs to figure out the most lucrative way to make money to convert these cars, reduce our dependence on oil, and reduce our emissions significantly.

Just an idea.



Oh, we are in agreement =) (tx2vadem - 8/6/2008 4:47:05 PM)
I'm not saying get rid of CAFE from the law.  But tinkering with that does not need to be the focus.  That would be just distracting from a real solution.

And plug-in hybrids are just one piece.  There are full electric cars with 200 mile ranges.  There are CNG vehicles (as T Boone Pickens is proposing).  And coordinating that conversion, like we are talking about, is beyond the scope of CAFE.  We wouldn't even be talking miles per gallon, that would be a moot point.  

I think we are on the same page.  Big ideas, bold ideas, new solutions, looking forward and not backward.



How do you propose negotiating to give way things we already want? (Silence Dogood - 8/6/2008 2:56:29 PM)
Most of the stuff in your first paragraph are things we already want and in some cases things we've already tried to offer.  We're already willing to give away sackfulls of cash for infrastructure improvement or windfarms in plains states, and those members are already not budging.  We've already been willing to help the auto industry move towards more fuel efficient vehicles--not just with regulations but with credits and even hard currrency--and they're not budging.

If any of this was a good enough incentive to bring Republicans to the table, we'd have already found a deal.



First thing we need to do... (Lowell - 8/6/2008 3:03:02 PM)
...is make the offer.  Then, we need to pick up a bunch of Senate and House seats this November, PLUS the White House of course.  Finally, we citizens need to put pressure on our lawmakers to get something done in the crucially important areas of energy and environment.  After all that, we should be able to "make a deal" we can all - except perhaps the climate change deniers at Exxon Mobil- be happy about.


One potential leader in this, by the way (Lowell - 8/6/2008 3:03:40 PM)
could be "radical centrist" Mark Warner.  


Absolutely right. (Silence Dogood - 8/6/2008 3:18:25 PM)
We need to make an offer and either (1) get the deal we want now or (2) wait six months and get the deal we want in January 2009.  Personally I think we might be able to find enough scared Republicans who are willing to make a deal now, and if we take away their off-shore drilling club it benefits them politically to try and take the entire issue off the table.

If they won't give in, though, I am perfectly happy to wait six months and let experienced leaders like Mark Warner show us what they do best: create meaningful solutions by bringing people to common ground.  I want to note on his behalf, by the way, that he was the first one to signal a willingness to reach middle ground on off-shore drilling. :-)



Really? (tx2vadem - 8/6/2008 4:58:53 PM)
I don't know how the auto industry or business lobbies in general feel about the current proposals Democrats have put on the table.  Or whether they are even bothering to try given the sense that nothing is going to happen.

But I am certain that there are other things that would make Republican members happy with the solution.  The caucus hold out is about election year politics and painting Dems as do-nothings on energy prices.  So as AIAW points out at the beginning of this, putting the drilling on the table strips away that political game.  It gets them to the table (maybe, if this is even really what they want), and then there are going to be other things that they like and don't like.  This just gets the ball rolling, I don't think it is the be-all and end-all of a compromise solution on energy.

Even still, probably nothing will happen this year.  Putting together a monumental, good, compromise solution takes a lot of time.  I don't think there is enough between now and November.  And then I don't think there is enough between November and the holiday break.



What, you can't wait a few months until we may have a huge (hcc in va - 8/6/2008 1:15:41 PM)
majority in Congress that can get our objectives passed?  Sorry, I'm still a bit averse to negotiating with terrorists or blackmailers.


Sure, I didn't say we had to do this today (Lowell - 8/6/2008 2:34:25 PM)
but we shouldn't wait much longer, and I'm certainly not convinced we're going to have 60 votes in the Senate to overcome filibusters...


What Paris said! (redsoxkangaroo - 8/6/2008 1:19:17 PM)
n/t


Which is EXACTLY what Obama said. (Bubby - 8/6/2008 2:00:22 PM)
Here.