Looking for an energy compromise? Here's one scenario

The single biggest question this August congressional recess remains whether compromise energy legislation that includes opening more of the US Outer Continental Shelf to leasing will be seriously considered in September.

The single biggest question this August congressional recess remains whether compromise energy legislation that includes opening more of the US Outer Continental Shelf to leasing will be seriously considered in September.

Washington observers generally agreed by mid-August that US House Speaker Nancy Pelosi (D-Calif.) remained adamant that the OCS question wouldn't come to the floor despite dropping some tantalizing hints that it might.

They even suggested that Pelosi told other House Democrats that she'd take any heat for not bringing the question to a vote so they'd be free to say what they wanted if it would help them get re-elected.

Pelosi stuck to her guns as other House members proposed at least two bipartisan compromises. HR 6709, which Reps. John E. Peterson (R-Pa.) and Neil Abercrombie (D-Haw.) introduced, has more co-sponsors but takes a more aggressive approach to opening additional OCS areas than HR 6817, which Rep. Jim Matheson (D-Utah) offered with six co-sponsors.

Reid's responses

Energy legislation compromise prospects looked somewhat better in the US Senate when Majority Leader Harry M. Reid (D-Nev.) commended the so-called "Gang of 10" for developing their proposal and agreed to the bipartisan group's earlier request for a day-long energy summit. Reid also asked Energy and Natural Resources Committee Chairman Jeff Bingaman (D-N.M.), who ran a day-long forum on crude oil prices on July 17, to lead the energy summit.

When Bingaman accepted the assignment on Aug. 4, however, he added energy commodities regulation (which the Gang of 10 sidestepped) to the agenda. "We must ensure the proper functioning of markets for oil and gas so that prices are not artificially high because of excessive speculation," he said.

Other federal lawmakers are ready to bring up their own ideas to modify the Gang of 10's proposal. Two Colorado Democrats, Sen. Ken Salazar and Rep. Mark Udall (who is running to succeed retiring Sen. Wayne Allard, a Republican) want to add provisions which would develop additional domestic energy resources much more gradually. Still, its prospects look better than either House bill, at least initially.

Additional taxes

For the petroleum industry, the Senate plan's biggest problem is the approximately $30 billion of taxes which would be used to help finance $84 billion of investments in new energy programs. The plan's approach to opening more of the OCS is so modest that the proposal is "light on new production and heavy on new taxes," the American Petroleum Institute said on Aug. 13.

"Leasing in the North Atlantic and off the Pacific Coast would be banned and plentiful hydrocarbon resources in Alaska would remain off-limits. Significant regulatory burdens on new development would remain in place," API President Red Cavaney observed.

The idea could still move forward if new OCS activity is limited to tracts off Virginia, North Carolina, South Carolina and Georgia, one lobbyist suggested. But it would then need to become part of a major appropriations bill before being sent to the House, which would put more pressure on Pelosi to let it come to a vote there, he added.

Contact Nick Snow at nicks@pennwell.com

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