In the year since comprehensive energy legislation became law as the Energy Policy Act of 2005, Congress has stayed busy trying to pass more energy legislation. The exertion says much about last year’s triumph.
To the good fortune of energy consumers, Congress so far hasn’t managed to pass any of the recent proposals. Most bills have been designed to punish oil and gas companies for earning money while prices are high-that is, for being oil and gas companies. With one exception, the few constructive measures on offer this year-to streamline the permitting of refinery construction, for example, and to approve leasing of the Arctic National Wildlife Refuge coastal plain-have stalled or fallen to defeat. The exception is expanded leasing of the Outer Continental Shelf, for which modest hope remains.
Lifting moratoriums
In late June, the House of Representatives took an important step toward lifting leasing moratoriums in effect for most of the OCS since 1982. Its Deep Ocean Energy Resources (DOER) Act would end moratoriums on OCS acreage 100 miles or more from shore, prohibit leasing out to 50 miles from shore except where affected states rescind the ban, and allow states to block activity 50-100 miles from their coasts. DOER also would allow coastal states to share OCS lease revenues and royalties.
While the House stepped in the right direction on OCS leasing, the Senate only nodded that way with its Gulf of Mexico Energy Security Act. Passed last week, the bill offers for lease 8.3 million acres in the Sale 181 and 181 South areas south of Pensacola and more than 100 miles from the Florida and Alabama coasts (see p. 24). But it would preclude leasing until at least mid-2020 of about 70 million acres to the north and east. The lock-up would occur through a combination of a 125-mile buffer off most of Florida’s west coast plus prohibitions against leasing beyond that limit and east of a north-south line that runs roughly through Fort Walton Beach. The lock-up, of course, appeases Floridian lawmakers who oppose all oil and gas activity other than consumption. The Senate measure also would share OCS revenues with four coastal states, subject to a limit.
Against the US need for the oil and gas supply that can result from overdue leasing reform, the Senate’s effort is puny. In the limited time remaining in the congressional session, reconciling it with the much broader House measure would be difficult in any event. Yet even before passing their leasing bill, senators rankled members of the House by foreswearing changes to key parts when the measure, as it probably will, goes to conference.
For that matter, the House legislation, superior as it is to the Senate bill, isn’t perfect. It would enhance the power of coastal states to foreclose work on federal land with the potential to benefit people in all states. And the generous buffer zones it envisions would perpetuate exaggerations about the environmental threat posed by offshore drilling and production. States where those exaggerations sway policy-making would ban leasing as quickly as they could and no doubt challenge activity beyond the 100-mile limit.
Some vs. none
Still, the chance for some leasing beats no chance for any leasing at all. And no leasing at all is now the sad condition of 85% of the OCS. It remains perplexing that the world’s largest single oil-consuming nation-a country whose precarious gas balance begs for more offshore drilling and production-imposes such compromises on work clearly essential to its economic health.
Assistant Majority Leader Mitch McConnell of Kentucky explained the problem when he called a measure that locks away eight times more OCS area than it makes available for lease “absolutely the best bill the Senate can pass at this time.” Lawmakers said similar things last year when they passed the overstuffed and underperforming Energy Policy Act, the failures of which they now find themselves having to address. Now, at least, supply of conventional oil and gas is beginning to receive the attention it needs. Progress, however slow, is progress.
