In a year otherwise favoring Dem­o­crats, high gas prices served up a potential windfall for the GOP. House Republicans rallied around a shared opposition to the congressional ban on offshore drilling, and even John McCain got in on the act. By mid-September, two-thirds of the public supported lifting the ban. The Dem­o­crats, lacking the votes to renew it, let it lapse on Oct. 1.

The victory, such as it was, almost didn’t happen. In early August, when pressure on Democrats was at its highest point, five Republicans and five Dem­o­crats formed a “Gang of 10” in the Sen­ate and put forward energy legislation that would have kept the ban in place for all but a small portion of the Outer Con­ti­nen­tal Shelf. In exchange for this tiny bit of drilling, the gang’s proposal called for a big chunk of subsidies for “green” energy, giving Democrats a soft place to land on the drilling issue. The gang end­ed up falling apart, but its flawed compromise will un­doubtedly serve as a mod­el when Dem­ocrats attempt to reinstate the ban next year.

The gang’s compromise legislation start­ed taking shape in June — before public anger over high gas prices really peaked. An aide to a senator who opposed the gang’s efforts tells National Review that the gang started as a working group being run by Georgia Re­pub­li­can Saxby Chambliss, which Senate GOP leader Mitch McConnell allowed “under the guise of being able to go out and negotiate with Democrats.” Ac­cord­ing to the aide, McConnell told Cham­bliss to “negotiate, but don’t come up with an agreement that negates our principles.”

Chambliss’s Democratic counterpart in the negotiations was Senate Budget Committee chairman Kent Conrad of North Dakota. At the time, Chambliss had just finished working closely with Con­rad on the passage of a new farm bill. Chambliss, the ranking Republican on the Agriculture Committee, needed Conrad’s help to square that bill’s $300 billion price tag.

Chambliss and Conrad are both farm-state senators and supporters of the handout-dependent biofuels industry. The farm bill they put together authorized billions in new subsidies for biofuels, including loan guarantees for the construction of biofuel refineries, $400 million in direct payments to biofuel pro­ducers, and over $1 billion to subsidize the conversion of domestically produced sugar into ethanol. (Brazil has plenty of cheap sugar-based ethanol, but the farm bill renewed the 54-cent-per-gallon tariff that keeps it locked out.)

Biofuel supporters in Congress can feed from both the agriculture and the energy troughs, and this summer pre­sent­­ed an excellent opportunity for Cham­bliss and Conrad to move seamlessly from one to the next. Most of the gangsters they recruited — including Re­pub­li­cans Johnny Isakson of Georgia, John Thune of South Dakota, and Bob Corker of Tenn­essee — also come from states with sig­nificant biofuel interests. (The fifth Republican, Lindsey Graham, saw the bill as an opportunity to promote nuclear power in his home state of South Caro­lina.)

The gang’s proposal called for a sevenfold increase in federal funding for bio­fuels research — from around $350 mil­lion to nearly $3 billion per year. Most of this money would fund research into cellulosic ethanol, which is produced from non-edible plant matter like wood chips and switchgrass. The concept is similar to the “Mr. Fusion” device from Back to the Future: Take a bunch of garbage that nobody wants and turn it into energy. And, like Back to the Future, cellulosic ethanol is pure fantasy.

Economic barriers to the cost-efficient production of cellulosic ethanol are so numerous that time travel seems more probable. Breaking down the indigestible mass normally requires the use of expensive enzymes, and even methods that avoid this process run into problems of scale involving the transport of enormous quantities of feedstock. Suf­fice it to say that cellulosic ethanol cannot currently compete with its also-inefficient corn-based cousin, much less gas­o­line, on a cost-per-gallon basis.

Unfortunately, pro-biofuel politicians have taken an “If you build it, they will come” approach to cellulosic ethanol. A 2007 law mandates its use in gasoline beginning in 2010, creating a market where there was none, and the De­part­ment of Energy has started pumping money into the construction of refineries. Last year, the DOE awarded $76 million to Range Fuels for the construction of the nation’s first commercial-scale cellulosic-ethanol plant in Cham­bliss and Isakson’s home state of Georgia.

The idea behind the gang’s massive increase in funding for biofuels research is that the industry needs to solve the cost-efficiency problem before the mandates kick in and the refineries come online. This explains not just Chambliss’s and Isakson’s support, but also Bob Cork­er’s. Last year, Corker put out a press release bragging about his role in securing $125 million for a bio-energy research center at Oak Ridge National Lab­or­a­tor­ies in Tennessee. Oak Ridge would be perfectly placed to compete for billions of additional research dollars.

The gang’s proposal also included sweeteners for proponents of plain old corn-based ethanol, such as John Thune. It had loan guarantees for the construction of new pipelines capable of transporting E85, a fuel blend composed of 85 percent ethanol. (Ethanol cannot travel through ordinary pipes, because it corrodes them and absorbs water and other impurities.) It would have expanded tax credits for E85-powered automobiles and gas stations that sell E85. It proposed an extraordinary requirement that 100 percent of automobiles manufactured for use in the United States be capable of running on some form of alternative (non-gasoline) fuel by 2020.

Ethanol obviously links four of the gang’s five Republicans, but it wasn’t immediately clear to me why the fifth, Lindsey Graham, decided to join. On National Review Online I speculated that maybe Graham had a mania for joining bipartisan gangs (he was in the “Gang of 14” on judicial nominations in 2005). Then an aide to Graham informed me that the gang’s proposal included fed­er­al funding for a nuclear-fuel reprocessing plant in Barnwell, S.C. Jimmy Carter cut off federal funding for the plant’s construction in 1978, dooming the project, and South Carolina politicians have been trying to restore it ever since.

There are reasonable arguments that the federal government should invest in a nuclear-fuel reprocessing plant, although I will not make them here. And some people genuinely believe that biofuels are the key to our energy future, although I strongly disagree. The gang also called for billions in direct subsidies and tax credits for hybrid cars, plus more spending on wind, solar, and other renewable-energy projects of debatable value.

But even if a conservative were favorably disposed toward these policies, he should consider the trade-offs. The Re­pub­li­cans in the gang agreed to $84 billion in new spending and $30 billion in tax hikes on the U.S. oil-and-gas industry in exchange for a small amount of drilling. In the process, they very nearly derailed their party’s ultimately successful effort to get rid of the drilling ban with no spending and no tax hikes.

The gang’s meager drilling proposal would have allowed four states — Georgia, Vir­gin­ia, and the Carolinas — the right to grant new offshore leases beyond a 50-mile buffer zone. It also would have re­duced the buf­f­er zone off the west coast of Florida from 125 to 50 miles, but Florida’s east coast and the oil-rich Pacific would have remained off-limits. On the whole, the gang’s plan would have kept the drilling ban in place for roughly 80 percent of the Outer Con­ti­nen­tal Shelf.

Keep in mind that the gang started work on its proposal in June, and gas prices did not peak until mid-July. On July 14, President Bush lifted an executive ban on offshore drilling, increasing pressure on Congress to act. House and Senate Republicans hammered Dem­o­crats on their unwillingness to lift the ban, and Republicans in close races around the country saw their numbers go up as they delivered a simple message: Drill here, drill now.

As polls reflected substantial and growing support for lifting the ban, victory on the drilling issue started to come into view. But in early August, the gang un­veiled its compromise bill with the misleading drilling language, giving Dem­­o­crats a way to “vote for drilling” without angering environmentalists. Bet­ter still from the Democrats’ perspective, it allowed them to accuse Republicans who opposed the compromise of trying to protect Big Oil.

Speaker Nancy Pelosi was quick to adopt the gang’s approach in the House, but in an ironic twist of fate, the bill she introduced sowed the seeds of the gang’s demise. Pelosi’s bill was similar to the gang’s in many respects, but it actually allowed more drilling (although still much less than under no ban at all). Even so, her bill was endorsed by the New York Times editorial board and the Sierra Club, putting the gang’s Republicans to the left of those venerable liberal institutions. The gang — which by this time had grown to 20 members as moderates from both parties glommed on — fell apart when Re­publicans tried to change the proposal to include at least as much drilling as Pelosi’s bill.

Pelosi was able to pass her bill on a largely party-line vote, but — with the gang in tatters and the president threatening to veto any bill with a tax in­crease — Senate majority leader Harry Reid decided not to bring new energy legislation to the floor. Without a “comprehensive” solution to fall back on, Dem­o­crats faced a stark choice: renew the offshore-drilling ban or let it lapse. The Democrats decided that they did not have any political capital to spare. The ban expired, and Re­pub­li­cans claimed a victory.

But this victory could be short-lived. One of the most unfortunate aspects of the Gang of 10 is that it created a template to which Democrats can return next year. Leading Democrats have already vowed that they will try to reinstate parts of the ban, such as the 50-mile buffer zones that would lock away 95 percent of the approximately 10 billion barrels of oil off the Pacific coast.

Pelosi has already passed a sham bill in the House that Barack Obama, should he win, would have no problem signing. Assuming the Democrats do not gain a filibuster-proof majority, a unified minor­ity in the Senate is the GOP’s best hope for making sure that the Outer Con­ti­nen­tal Shelf stays open long enough for producers to bring new supplies online. For the sake of Amer­i­ca’s energy future, let’s hope this particular gang does not get back together.