For a baffling array of bad reasons, the US Congress produced, before starting its 5-week recess, one beneficial proposition on energy along with a baffling array of wrong proposals, one of which would annul the lonely right one. This may be all anyone should expect from a body that has passed two wayward energy laws in the past 3 years.
At least offshore leasing has new life as a political issue and receives attention in new House and Senate bills. In neither case, however, does the effort go far enough. The Senate measure would allow federal oil and gas leasing off several eastern states but make it subject to state approval, a 50-mile buffer zone, and federal-state revenue sharing. It also would extract $30 billion from oil and gas companies to help fund $84 billion in government support for noncommercial energy and conservation adventures.
Big spending
The House bill is more ambitious about Outer Continental Shelf leasing but still leaves decisions to coastal states. Instead of taxing oil companies, it would spread half the proceeds of the new leasing among various “reserves”: $208 billion for conservation, $260 billion for environmental restoration, $390 billion for renewable energy, $130 billion for nuclear waste and carbon capture and sequestration, and so forth. Spending like that can buy a lot of votes.
The direction is clear: OCS leasing where it’s prohibited now—but in a package that, after political deals are made, probably would raise taxation of oil companies and waste billions of public dollars on popular but mostly hopeless energy projects.
This lunacy makes clear that the US political class lacks the capacity for rational thought on energy. The deficiency, moreover, is bipartisan.
Republicans are right to want to expand OCS leasing. But they’ve linked the issue to public anxiety over high gasoline prices. Where were they when action on OCS leasing might have meant something to today’s fuel prices?
Democrats, loath to upset environmentalists, skirt the issue by pointing out that new leasing would have no immediate price effect. But they can’t make the point without getting even weirder than Republicans.
“The Republicans propose to give away public lands to big oil, which will not immediately reduce the price at the pump and save Americans only 2¢ 10 years from now,” said House Speaker Nancy Pelosi of California. Notice the assumption, which echoes a statement by Sen. Barack Obama (D-Ill.), the Democratic presidential nominee-in-waiting: To lease federal acreage for exploration and development is to give something away to oil companies.
That’s just stupid. There’s no nice way to say it.
Elected officials should know and be willing to acknowledge that federal leaseholders pay for the privilege of risking millions of dollars on exploration in hopes of finding reason to invest even more in development and production, on which they pay royalties and taxes. But Pelosi and her party colleagues give further reason to doubt they know anything about these subjects by offering the existence of undrilled leases as a reason to open no more of the OCS.
Republicans have no right to gloat over the Democrats’ serial displays of energy ignorance. They controlled both houses when Congress passed the Energy Policy Act of 2005, which fattened the government’s role as fuel arbiter and dispenser of energy subsidies and mandates. A triumph of that law was the ethanol mandate in vehicle fuel, now increasingly recognized as a costly error. Of course Congress expanded the mandate to ridiculous levels in 2007 after Democrats reclaimed both houses. But Republicans made the first mess.
More bewilderment
Their bewilderment doesn’t confine itself to Congress. President George W. Bush lowered the intellectual standard with his initial proclamation, in January 2006, that “Americans are addicted to oil.” No wonder Americans fantasize about energy independence and an economy devoid of fossil energy.
So lawmakers stagger yet again toward error and needless cost—political ballast for part of a right move on OCS leasing. Meanwhile, voters can learn much from a gasoline price slump that started before their elected officials could fashion a rescue.
