Energy Freedom Day 2008

October 1st is just around the corner and regardless of what the Congressional leadership does at the end of September; it will be a seminal day in American political history. If Pelosi, Reid and their compatriots slip another oil drilling ban in the annual appropriation or continuing resolution that they will have to pass to keep the government running, it will demonstrate just how hopelessly indifferent they are to the needs of the American people while highlighting with perfect clarity their fealty to the leftist fringe. On the other hand, if they do nothing then we will be well on our way to developing domestic energy again, lowering the price at the pump and generating revenue that will ultimately lead to the kinds of alternative renewable energy sources that the environmentalists have been carping about for years. It will also mark one of the few times in history when Congress has seen the wisdom in shutting its collective mouth and getting out of the way, which may actually be more important to future historians than the reason they shut up in the first place.

The Comprehensive American Energy Security and Consumer Protection Act

Not to be forced into the humiliating position of having to admit to their constituents this campaign season that they did nothing about the energy crisis, the Democratic congressional leaders pulled a rabbit out of the hat with H.R. 6899, the Comprehensive American Energy Security and Consumer Protection Act. The 290-page bill was introduced at 9:45pm last Monday and passed along party lines (236-189) late Tuesday night with no amendments permitted. According to Speaker Nancy Pelosi:

The legislation is a bold step forward, helping end our dependence on foreign oil and increase our national security.  It launches a clean renewable energy future that creates new American jobs, expands domestic energy supply--including new offshore drilling, and invents and builds more efficient vehicles, buildings, homes, and infrastructure.  It will lower costs to consumers and protect the interests of taxpayers.  It is a comprehensive strategy, and the product of bipartisan compromise.  It offers Republicans who want a comprehensive approach the choice to make sure Big Oil pays its fair share.

That sounds good; an amazingly comprehensive approach to solving America’s energy woes and that is just what we need. In fact, the only things this bill doesn’t seem to do is reduce crime, increase literacy, ensure peace in our time and cure the heartbreak of psoriasis. The first question I have is, how will it work? Let’s look at the legislation summary:

  • Prohibits oil and gas preleasing or leasing of any area of the Outer Continental Shelf that was not available for oil and gas leasing as of July 1, 2008, unless that action is expressly authorized by this Act or a statute enacted by Congress after the date of enactment of this Act.
  • Authorizes oil and gas leasing, under certain conditions, for any area that: (1) is in any Outer Continental Shelf Planning Area in the Atlantic Ocean or Pacific Ocean that is located farther than 50 miles from the coastline; and (2) was not otherwise available for oil and gas leasing, preleasing, and other related activities as of July 1, 2008.
  • Requires approval of the adjacent state for oil or gas leasing in any area located within 100 miles from its coastline and within its seaward lateral boundaries.
  • Prohibits such leasing in certain areas.
  • Royalty Relief for American Consumers Act of 2008 - Requires the Secretary of the Interior to agree to any lessee request to amend any oil and gas lease issued for any Gulf of Mexico tract during 1998-1999 to incorporate specified price thresholds applicable to royalty suspensions.
  • Reaffirms authority of such Secretary to vary the suspension of royalties under certain leases, based on the price of production.
  • Prescribes eligibility requirements for new leases and the transfer of lease
  • Establishes a Strategic Energy Efficiency and Renewables Reserve.
  • Prescribes conditions for: (1) federal receipt of oil or gas as royalties in-kind; and (2) royalty-in kind ethics.
  • Empowers the Inspector General of the Department of the Interior to use subpoenas to pursue any investigation involving property leases from the United States through the Minerals Management Services for purposes of oil and mineral extraction.
  • Amends the Federal Oil and Gas Royalty Management Act of 1982 to revise requirements governing: (1) interest; (2) obligation period; (3) tolling agreements and subpoenas; and (4) liability for royalty payments.
  • Drill Responsibly in Leased Lands Act of 2008 - Amends the Naval Petroleum Reserves Production Act of 1976 to provide for acceleration of lease sales for national petroleum reserve in Alaska.
  • Directs the Federal Energy Regulatory Commission (FERC) to facilitate construction of pipelines to transport oil and natural gas from or through the National Petroleum Reserve in Alaska to existing transportation or processing infrastructure on the North Slope of Alaska.
  • Bans the export of Alaskan oil.
  • Amends the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2008 to repeal the ban on: (1) final regulations regarding a commercial leasing program for oil shale resources on public lands; and (2) oil shale lease sales.
  • Amends the Energy Policy Act of 2005 to require state approval of federal oil shale leasing in the state.
  • Consumer Energy Supply Act of 2008 - Prescribes conditions for the sale and replacement of oil from the Strategic Petroleum Reserve (SPR).
  • Saving Energy Through Public Transportation Act of 2008 - Provides for: (1) grants to improve public transportation services; (2) vanpool demonstration projects; and (2) a national consumer awareness program on public transportation alternatives.
  • Amends the Energy Conservation and Production Act to revise requirements for the updating of state building energy codes.
  • Amends the Public Utility Regulatory Policies Act of 1978 to prescribe a federal renewable electricity standard.
  • Green Resources for Energy Efficient Neighborhoods Act of 2008, or the GREEN Act of 2008 - Prescribes requirements for Department of Housing and Urban Development (HUD) programs and activities relating to energy efficiency, including standards and energy efficient mortgages.
  • Directs the Secretary of Energy to award a competitive grant to one consortium of institutions of higher education to establish a NationalEnergyCenter of Excellence.
  • Energy Tax Incentives Act of 2008 - Amends the Internal Revenue Code to set forth incentives and credits relating, in part, to: (1) clean renewable energy bonds; (2) advanced coal project investments; (3) transportation and domestic fuel security; and (4) energy conservation and efficiency.

A Closer Look at H.R. 6899

This is pretty much what one could expect from someone like Nancy Pelosi. There is a lot in here for the environmental movement, it dips into the Strategic Petroleum Reserve, and it creates a nice National Energy Center of Excellence, but the list of items that can directly influence the pump price of gasoline is conspicuously short and what little is there does not inspire a great deal of confidence that this bill will actually ease the price of energy very much at all. For example, the bill does not:

  • Permit drilling closer than 50 miles off shore. Experts say that much of the oil and natural gas we need today is to be found within 50 miles of the shore, as much as 88% of what is out there. All of that will be off limits under this legislation.
  • Provide for fees or royalties to be paid to the states. The states need oil revenue and have a right to it if they permit drilling on their lands or off their coasts. This bill cuts them out of that revenue making it far less likely that they would permit exploration.
  • Curb litigation against energy exploration. Perhaps the one greatest roadblock to American energy independence is not technical or geological, it is legal. Environmental groups, unable to stop new exploration any other way have resorted to the courts to delay and even scuttle attempts to get new lands producing.
  • Make any provision for either clean coal or nuclear power. It may seem obvious, but proven technology is always better to dig yourself out of an immediate problem than trying to invent something new. Both clean coal and nuclear power are proven, abundant and available right now.
  • Say anything concrete about helping consumers. The people who are struggling with high energy prices, who are forced to pay exorbitant rates for gasoline and electricity, heating oil and natural gas, barely get a mention outside of the title of this legislation.

The Bottom Line

This bill is little more than a cynical political manipulation. If the bill is passed by the Senate and sent to the President and he vetoes it since it doesn’t actually accomplish anything—except, perhaps, driving up electricity costs—then Democrats can go home to campaign saying that they tried to pass energy relief and the Republicans stopped them. You lose. If the President signs it, then we can expect a lot of money to be spent on long-term projects while we become accustomed to ridiculously high energy prices. Again, you lose. We all lose.

High energy prices are hurting individuals, they are hurting business, and they are hurting the nation as a whole. These high costs are driving inflation as well as unemployment. As a nation, we have neither the time nor the resources to play the kind of political games implicit in legislation like The Comprehensive American Energy Security and Consumer Protection Act—too much is at stake. The country needs relief, not consortiums; lower gas prices, not ongoing restrictions.

The Senate has just taken up this bill. Contact your senators and voice your opposition, or visit www.energyfreedomday.com and sign the petition. Make your voice heard in Washington in favor of lower energy prices and real energy independence. Our nation, our economy, our businesses and our people are depending on it.