With the clock ticking down to what some are calling “Energy Freedom Day” — October 1, 2008, when the congressional bans on offshore oil drilling and onshore oil-shale development are set to expire — anti-drilling Democrats have backed down from a high-stakes stand-off that could have caused a government shutdown and will now result in the complete demise of the drilling bans. This is a stunning victory for grassroots activists over environmental special interests and business-as-usual in Washington. If not derailed, it also will be great news for all American consumers.
Here’s a behind-the-scenes look at how the pro-drilling victory transpired.
The normal process of funding the U.S. government through appropriations bills broke down this year, forcing Congress to prepare a continuing resolution to keep the government funded at last year’s levels. Proponents of American oil and gas production have long suspected that the Democrats would use the resolution to hide an extension of the wildly unpopular bans on offshore drilling and oil-shale development. The theory was that by simply extending last year’s Interior Appropriations act, which included the bans, they could hide an extension without even mentioning it in the text of the bill.
To pre-empt this strategy, Jim DeMint in the Senate and Jeb Hensarling and John Shadegg in the House collected signatures from enough members of Congress to make it clear that an expected presidential veto of any such extension of the drilling ban would be sustained. Meanwhile, free-market and conservative groups presented a united front to Congress and the White House, urging lawmakers to let the ban expire. Facing organized opposition in Congress and overwhelming public opinion in favor of drilling, Democrats signaled late last week that a continuing resolution would not include an extension of the drilling bans.
But that’s when the financial crisis struck and everything on Capitol Hill was thrown into the air.
With the Treasury’s proposed financial-market intervention drawing attention away from the energy debate, anti-drilling House Democrats were temporarily emboldened. On Monday they inserted language into their continuing-resolution draft that would permanently ban oil drilling within 50 miles of the U.S. coast, where the vast majority of offshore oil and gas is believed to be.
Their political calculation was that the White House would be willing to sign this into law and go along with the charade that it represented a real increase in offshore drilling. That calculation was wrong. News broke last night that President Bush threatened to veto the continuing resolution unless it allowed the bans to cleanly expire. As a result, Democrats backed down — no doubt aware of the strength of public opinion on the underlying policy issue.
Unless there’s another unexpected twist in the next few days, the legal process set in motion on October 1 could go a long way toward reversing market psychology and bringing energy prices back down. We witnessed this effect when crude prices dropped sharply from their July peak after President Bush lifted the executive ban on domestic drilling.
Proponents of increasing American energy production (including all the signers of the DeMint and Hensarling/Shadegg letters) deserve credit for this incredible turn of events, which seemed to be outside the realm of the politically possible just a couple of months ago.
This is a stunning victory, but it’s only the beginning of an effort to increase domestic oil and gas production. In the post-drilling-ban world, Congress will still need to pass legislation that protects drillers against frivolous lawsuits, streamline the regulatory approval process for domestic energy production, and work toward oil-revenue sharing with the states. That said, on October 1 Americans should be able celebrate Energy Freedom Day and the incredible, improbable policy victory that has been achieved.