House barbs fly as 'Use it or lose it' bill heads to floor

US House Democrats and Republicans accused each other of indifference to record gasoline prices as the week-long Independence Day recess drew closer. Voters are asking why Congress hasn't acted, lawmakers on both sides of the aisle said.

Nick Snow
Washington Editor

WASHINGTON, DC, June 26 -- US House Democrats and Republicans accused each other of indifference to record gasoline prices as the week-long Independence Day recess drew closer. Voters are asking why Congress hasn't acted, lawmakers on both sides of the aisle said.

The parties remained far apart on solutions June 25 as Democrats promoted bills they said would benefit consumers more than major oil companies and Republicans demanded legislation that would increase available domestic supplies.

Speaker Nancy Pelosi (D-Calif.) said the House will have an opportunity to do exactly that on June 26 when it debates H.R. 6251, which is formally designated the Responsible Federal Oil and Gas Act but which is more commonly called the "Use it or lose it" bill (OGJ Online, June 24, 2008).

"There are tens of millions of acres these big oil companies already have where they're not drilling," she told reporters in a late afternoon briefing that included Majority Leader Steny H. Hoyer (Md.), Majority Whip James E. Clyburn (SC), Democratic Caucus Chairman Rahm Emanuel (D-Ill.) and the caucus's vice-chairman, John B. Larson (Conn.).

"We believe hundreds of millions of barrels of oil and trillions of cubic feet of natural gas are available on already authorized leaseholds," Hoyer said. Voters will not accept excuses for not producing readily available domestic oil when gasoline is selling for more than $4/gal, he maintained.

'You can't yell bingo'
Republicans responded that simply holding a federal lease doesn't necessarily mean oil or gas can be produced from it. "Just because you have a bingo card doesn't mean you get to yell bingo," observed Todd Tiahart (R-Kan.) at a briefing earlier in the afternoon.

Federal government regulators were more specific at a hearing that House Republicans held earlier that morning. "Some people apparently believe that when a producer acquires a lease, it can go into production immediately. That's not the case. To even begin the process, a lessee must obtain permits and meet requirements over several years," US Minerals Management Service Deputy Director Jon A. Hrobsky said.

"The process is similar onshore where there are more small than large operators and a wide range of resources. It takes years to analyze what's there, determine if it can be produced economically and develop the necessary infrastructure," added Tim Spisak, fluid minerals division chief at the US Bureau of Land Management.

MMS grants offshore leases for 5, 8, or 10 years, Hrobsky said. "Every leaseholder has to pay bonuses before production begins. Shooting seismic can take years. Exploratory wells need to be drilled. Not every lease has oil and gas on it and if it does, it may not be economically recoverable," he explained.

"This 68 million-acre argument is bogus. Lots of it is acreage which has been unsuccessful. Some of it is still in the process. If we want to drill fewer wells that produce more oil and gas, we need to get into prime areas," said Rep. John E. Peterson (R-Pa.) at the afternoon briefing.

Lack of time, equipment
Responding to a reporter's observation that Republicans say H.R. 6251 duplicates existing federal law, Pelosi said, "That's not what we hear from the industry. Some executives say they don't have the time. Others say they don't have the equipment."

Noting that congressional Republicans and the Bush administration want to expand federal leasing to more of the Outer Continental Shelf and into the Arctic National Wildlife Refuge, Pelosi said, "If [oil and gas producers] don't have equipment to drill their existing leases, where are they going to get it to drill in pristine areas? If they don't have enough time to drill what they already have, where will they find it for new areas?"

Republicans said that continued Democratic opposition to more federal leasing is a mistake. "Doing nothing is not a policy," said Henry E. Brown Jr. (SC), adding that when President Bill Clinton vetoed ANWR drilling authorization 13 years ago, he said it was because it would not supply oil for 10 years. "I'm more concerned about oil leaking from a passing supertanker and washing up on beaches in my district than I would be about production from a well 50 miles offshore," Brown said.

Tiahart said that the Appropriations Committee postponed consideration of the US Department of the Interior's fiscal 2009 budget because public support has grown for amendments that would lift congressionally imposed OCS leasing moratoriums, authorize leasing within ANWR, and overturn an oil-shale leasing moratorium. "The Interior budget bill is the best vehicle to start bringing prices down. If you have a reliable supply, it helps keep speculators at arm's length," he said.

Thelma D. Drake (R-Va.), who serves on the Armed Services Committee, said that the US Department of Defense faces the prospect of having to use emergency funds or divert money from other programs to pay for suddenly higher fuel costs. "The majority's refusal to let us explore for oil and gas and develop domestic supplies is inexcusable. The day we pass legislation opening up our own resources, we'll send a signal to the rest of the world that we're ready to regain control of our destiny," she said.

Target: oil speculators
Democrats argued that more direct action needs to be taken to curb excessive energy commodity price speculation which they said has driven up prices. "Today, we are putting oil speculators on notice," Pelosi said. She announced that she sent a letter to President George W. Bush calling on him to direct the Commodity Futures Trading Commission to use emergency powers it already has to investigate all energy futures contracts.

"Experts have testified this week before Congress that the explosion of speculation in the oil futures market could be driving up prices from $20[/bbl] to $60/bbl. Oil speculators are making money by betting against the American consumer at the pump. We want to help the American people here and now," Pelosi said.

Hoyer said several bills already have been introduced, and final legislation should be ready during July. "The Bush administration insists the run on [gasoline] prices is not due to speculation. Many experts disagree. It's just another area where the administration has taken the referee off the field," he said.

"The CFTC should use its emergency powers to drive out speculators who are pushing oil prices higher. The laws of supply and demand have been suspended. It has taken on almost a casino atmosphere. We represent Main Street instead of Wall Street on this issue," said Larson.

Emanuel said CFTC's reluctance to move against oil price speculators follows the same pattern as with home mortgage and student loans where regulators essentially had their hands tied behind their backs. "In each case where this administration [in the past] has put ideology ahead of what's working, there have been problems," he said.

'Price gouging' setback
House Democrats suffered a setback when their latest bill to require federal investigations and prosecution of alleged oil-product price gouging fell six votes short of passage on June 24 as 11 Republicans who supported a similar measure last year voted "no" this time.

"With prices rising, it makes sense that we would vote on this legislation before millions of Americans fill their gas tanks and hit the road for the Fourth of July," said the bill's sponsor, Rep. Bart Stupak (D-Mich.). "Rather than voting to provide federal protection that ensures gas and diesel prices are justified, House Republicans voted to protect the handful of unscrupulous wholesalers, retailers, and refiners raking in excessive profits from the very fuel prices crippling American families."

Republicans were equally adamant that their constituents were tired of congressional inaction to bring oil prices down. "I find it problematic that as I go home for the Fourth of July recess, I can't report progress in Congress on energy legislation to increase domestic oil and gas supplies. We're on course for a disaster in America's economic future," Peterson said.

"If the president wanted to lead, he would have lifted the presidential withdrawals first. There's been bipartisan neglect," he added.

"We are in the battle of this generation," Pelosi said. "When I became speaker, I realized the landmark battle would be energy security and climate change. It's not surprising that it has grown more intense as oil prices have gone up."

Contact Nick Snow at nicks@pennwell.com

More in General Interest