Offshore Oil Drilling

Last week, the House of Representatives approved the energy portion of a surface transportation package, the “Protecting Investment in Oil Shale the Next Generation of Environmental, Energy, and Resource Security (PIONEERS) Act” (H.R. 3408) by a vote of 237-187. The amended bill included several provisions to significantly expand offshore oil and natural gas development off the Pacific, Mid-Atlantic, and Gulf Coasts as well as Alaska as a way to fund transportation projects due to a shortage in federal-gas tax receipts for the Highway Trust Fund. In addition, HR 3408 would open up the Alaska National Wildlife Refuge (ANWR) to exploration, incentivizes the development of oil shale reserves and it includes language to expedite the approval process of the Keystone XL project. Prospects for final passage are uncertain at best as the bill faces stiff opposition in the Senate and a veto threat from the Administration.

As I previously predicted, climate change legislation is dead in 2010.   Senate Majority Leader Harry Reid announced that there will be no bill this session that would cap emissions of greenhouse gases.

In April I wrote about offshore drilling and how, politically, it wasn’t about the oil, given that the estimated recoverable reserves were unlikely to substantially impact our reliance on foreign sources of petroleum (the EIA Annual Energy Outlook 2010 assumes import reliance will remain near 50% through 2035, down from 57% in 2008); it was about securing votes for climate change legislation. 

State eNews Issue #44 | April 15, 2010

It’s unclear how states will be affected by President Obama’s plans to open up parts of the East Coast, the Gulf of Mexico and the northern coasts of Alaska to offshore oil drilling. What is clear, however, is this: Unless changes are made to the proposal, states will not receive any of the royalties from the oil production off their shores.