Offshore drilling bill vote postponed

Posted on Tuesday 5 December 2006

Today, the 109th Congress, having off-loaded the vast majority of its inbox for this last session, postponed voting on the offshore drilling bill (USA Today):

House Republicans on Tuesday postponed action on what was to be one of last major legislative achievements of this session of Congress, a bill to open a large area of the eastern Gulf of Mexico to oil and gas drilling.


Business groups have argued that new offshore energy development might ease natural gas prices, which have dropped significantly this year but still are three times to four times higher than what they were only a few years ago.

“This vote is the last chance Congress can come through for the American public,” said John Engler, president of the National Association of Manufacturers, urging the House to pass the Senate bill.

Personally, I doubt this would have much impact on natural gas prices, and even if it did, it would be a long-term outcome; exploration, followed by production, takes rather a lot of time. There is, however, rather more to this particular drilling measure than meets the eye:

Sen. Mary Landrieu, D-La., who helped craft the Senate bill, said the revamped revenue sharing plan would produce huge environmental benefits to the Gulf Coast by providing money for wetland restoration, levee repairs, flood control and hurricane protection. The bill eventually would give states 37.5 percent of royalties from all Gulf oil and gas production, compared with about 2 percent now.

For Louisiana that’s estimated to be more than $650 million a year, according to Landrieu’s office.

But some critics in Congress, as well as the Bush administration, have expressed concerns about the revenue loss to the Treasury and questioned why that much money should go to four states from federal resources.

Someone should remind those critics (including the Bush administration) that said money is not a federal bird in hand; this isn’t putting money in anyone’s coffers at the moment. Not only is it not drilled, it hasn’t been found or produced yet!

Furthermore, the drilling done to date off Louisiana’s coasts is considered to be a prime cause of the accelerated subsidence and lost coastland — in large part, what led to the terrible Katrina destruction.

Striving to preserve and or protect national lands and wilderness is a worthy aim, and when Senator Ted Stevens tried to open the ANWR as part of a post-Katrina aid package, I objected (in part) on just those grounds. However, opening the ANWR in Alaska as a condition for aid to the Gulf Coast was also a form of blackmail — a long-term goal for one state in exchange for a short-term and unsustainable band-aid elsewhere. A Louisiana that can contribute toward its own long-term future is a much different kettle of fish.

If there was ever a reason to approve further drilling, this is it.

10 Comments for 'Offshore drilling bill vote postponed'

    December 5, 2006 | 3:17 pm

    MWK regularly passes on articles on this stuff from oil industry publications to me, and the fascinating thing is the widespread acknowledgement that this stuff will have little or no effect on domestic supplies for the next couple of decades. That’s just how it’s sold to the public. The real motivator is providing revenue for oil companies, who are getting squeezed by increasingly independent and technologically savvy state oil companies in other parts of the world; they’ve made a bunch of money over the years because folks in the middle east and Africa needed western technology to get at their oil, but as they’ve advanced, they need us less – and our oil companies are getting an ever-smaller cut of the action there.

    That doesn’t resonate with the public, so we hear nonsense about domestic supplies when politicians try to sell the idea.

    December 5, 2006 | 3:25 pm

    The Offshore Drilling Bill…

    The House pulled the offshore drilling bill from today’s agenda, but what is this really about? Is it Big Oil? (Washington Post)

    December 5, 2006 | 4:56 pm

    If there was ever a reason to approve further drilling, this is it.

    Off the coast of Louisiana? Where? I could see it as a valid point off Florida around the Destin Dome, but Louisiana? Have you seen a map of offshore production platforms off that state?

    Where aren’t they drilling?

    December 5, 2006 | 5:08 pm

    Davebo — the areas involved weren’t just out from LA, but much of the Gulf, from (I think) the FL Panhandle west.

    The Master
    December 5, 2006 | 5:15 pm


    Sigh . . . . John’s comment reveals the customary bias and prejudices of the uninformed concerning the economics of oil & gas. One hardly knows where to begin to deconstruct and refute his comment.

    Let’s start with lead-time issues. Indeed, if the only oil worth looking for is oil that will spring from the ground within the next two-year congressional election cycle, then there’s no point in looking for it. It was found 5-10 years ago.

    By the way, does anyone remember President Clinton vetoing a bill authorizing drilling in the ANWR in 1995? One of his key reasons for doing so was that any oil found “wouldn’t impact domestic supply for a decade” . . . . as in, it would have been flowing in 2005. What did he care, he was going to be out of office then anyway. No point in losing political support today in order to serve the long term best interests of the country. Wouldn’t be a smart political move . . .

    Of course, Presidential shortsightedness and outright stupidity didn’t originate with Clinton. He merely carried on the work of his predecessors.

    As for the objection to “providing revenue for (US?) oil companies”, well, we can prevent that by inviting non-US “technologically savvy state oil companies” such as the Iranian National Oil Company, or the China National Oil Company in to do the work. Then no revenue will flow to the evil US oil companies . . .

    That’ll really enhance our energy security!

    December 6, 2006 | 4:39 pm

    By the way, does anyone remember President Clinton vetoing a bill authorizing drilling in the ANWR in 1995?

    Actually the bill Clinton vetoed did much more than just authorize drilling in ANWR. It also granted tax breaks and royalty forgiveness for companies willing to drill in the reserve.


    Because no company was willing to invest in the reserve without those tax breaks and royalty forgiveness.

    So why not hold out on ANWR until it’s actually profitable for a company to produce there? These days it may well be. But it wasn’t at the time due to low oil prices.

    December 6, 2006 | 9:45 pm

    Sure, I’d love yet another bill with even more drilling to destroy completely the wildlife of the Gulf.

    The Master
    December 6, 2006 | 10:05 pm

    “Actually the bill Clinton vetoed did much more than just authorize drilling in ANWR. It also granted tax breaks and royalty forgiveness for companies willing to drill in the reserve.”

    As I remember it, and as best I can find by Googling today, that’s not true. Clinton vetoed a Budget Reconciliation bill that included the repeal of the prohibition on drilling in ANWR.

    In fact, he demonized the Republicans for including it in the Budget Reconciliation as a back-door approach to “despoiling ANWR”. (It was eligible to be included in the Budget Reconciliation because it would have generated incremental revenue for the Treasury, first through lease sales and later through royalties and taxes on produced oil.) There may have been tax breaks proposed to incentivize drilling in ANWR in other legislation, but they were not eligible for inclusion in a Budget Reconciliation bill, since they would have reduced Federal revenues.

    Even if the repeal of the prohibition on drilling the ANWR had been bundled with tax incentives, if the objective was to reduce dependence on imported oil, it would probably have been a good deal. ANWR might hold as much oil as Prudhoe Bay, which has been producing for 30 years and flowed over 2,000,000 barrels/day at its peak (about 900,000 barrels/day today, when BP can keep it’s pipelines operating!) Some compensating tax breaks might have been an even better idea if operating in the ANWR was going to impose even more stringent and expensive environmental constraints than operating in Prudhoe Bay did.

    Ultimately, the question is: Do we want to reduce our dependence on imported oil or not? If so we need to find and produce more here, which means drilling where it is likely to be found. If “protecting” the deep water Gulf of Mexico and ANWR are higher priorities than reducing our dependence on imported oil, then we’re fine as is and let’s all just stop talking about it.

    However, Presidents and other politicians keep saying that reducing our import dependence is essential–then they refuse to take the politically unpopular steps needed to actually make it happen.

    December 7, 2006 | 11:56 am

    This post will be included in today’s “Carnival of Hurricane Relief.” See:

    December 7, 2006 | 12:12 pm

    [...] Offshore drilling bill vote postponedThe Gulf-drilling legislation supported by Congressman Jeff Sessions (a little higher in this list)? It has been postponed, Polimom reports. [...]

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