House OKs bill to allow drilling 50 miles offshore

WASHINGTON – The U.S. House approved a package of energy initiatives Tuesday, including measures that would allow oil drilling as close as 50 miles off the Atlantic and Pacific coasts and finance the long-term development of alternative energy sources.

In the first substantive votes since gasoline prices rose above $4 a gallon this summer, the House divided largely along party lines, 236 to 189, with most Republicans rejecting the Democratic-sponsored legislation because it would prohibit exploration of much of the known oil reserves closer to the coasts and in the Gulf of Mexico.

As they reversed their long-held opposition to more offshore oil exploration, Democrats said the increased taxes on oil companies in the bill and the collection of royalty payments from the drilling would yield billions of dollars to help finance the development of cleaner, renewable energy sources.

“We’re not trying to give incentives to drill, we’re giving incentives to invest in renewables and natural gas that will take us where we need to go,” House Speaker Nancy Pelosi, D-Calif., told reporters before the vote.

The legislation now moves to the Senate, where it will compete with three alternative proposals, each of which faces a difficult road to securing the 60 votes needed for passage.

If Congress does not act on the measures by Sept. 30, the current ban on offshore oil drilling will expire, and exploration will be allowed as close as three miles off all U.S. coastlines.

In July, President Bush lifted an executive order that had blocked drilling on the outer continental shelf.

Tuesday’s action came two months after the average price of gas peaked at more than $4.10 a gallon, prompting Republicans to make offshore drilling one of their central political planks as they headed into the party conventions and the fall elections.

But as Democrats buckled under the political pressure for more drilling and began assembling the legislation, oil prices began falling.

The cost of a barrel of oil has dropped about $55, or about a third, from its peak this summer.

The unexpected boon of falling oil prices did little to change the tenor of the political debate Tuesday.

Pelosi brushed aside suggestions that lower prices would discourage more domestic drilling, in turn reducing the amount of money available for renewable resources.

“I think once you go past $35 a barrel, there’s incentive for them to drill. It’s not just about the drilling revenues, it’s about ending the subsidies” and securing greater royalties, she said.

Republicans vowed to continue their push right up to Election Day for a more expansive drilling program and more funding for nuclear power, which was not included in the Pelosi bill.

“The American people understand that we need an ‘all of the above’ approach to securing our energy future – including drilling offshore, nuclear power, conservation and renewable energy,” said Brian Rogers, spokesman for Sen. John McCain’s presidential campaign.

Sen. Richard Burr, R-N.C., a McCain supporter who favors more drilling, said the summer price spike was such a shock to consumers that they will demand increased domestic production to protect against future run-ups.

“The impact was so great this time, the American people said, ‘Enough’s enough; let’s take back control,’ ” Burr said.

The legislation calls for drilling 100 miles off the Atlantic and Pacific coasts, or beyond 50 miles if governors and state legislatures approve.

It would repeal tax breaks given to major oil companies in a 2004 bill and would force companies to pay for leases given to them in the late 1990s for drilling in the Gulf of Mexico, a move that has saved them $15 billion over the past decade, according to Democratic estimates.

The bill requires 10 percent of the Strategic Petroleum Reserve to be released into the marketplace and increases funding for home-heating assistance for the poor.

One piece of the legislation was added this week when Democrats agreed to allow new exploration of oil shale in the Mountain West if states agree to it.

Republicans and some industry experts contend that little new energy production would result from the legislation, because federal studies have shown that more than 85 percent of known offshore oil reserves are inside the 50-mile mark.

The bill would not allow the sharing of royalties from leases with states, something that could decrease the incentive for state governments to allow drilling closer to their coasts. Pelosi indicated some willingness Tuesday to consider a compromise on that issue.

Calling the process “rigged,” House Minority Leader John Boehner, R-Ohio, protested the less-than-24-hour period between the legislation’s unveiling and Tuesday’s vote, during which Republicans could not offer amendments.

“The bill that’s coming to the floor is nothing more than a hoax on the American people, and they will not buy it,” Boehner said.