Democrats Continue to Exploit Gulf Crisis

“You never want a serious crisis go to waste.  And what I mean by that it's an opportunity to do things you think you could not do before.”            
— White House Chief of Staff Rahm Emanuel, November 2008

“The disaster in the Gulf is a wake-up call that we need a new strategy for a clean energy future, including passing comprehensive energy and climate legislation."
— White House Climate Czar Carol Browner, June 29, 2010

Diligently following the White House’s motto of never letting a serious crisis “go to waste,” President Obama and Congressional Democrats are hard at work pushing an anti-energy agenda even as oil continues to spill into the Gulf of Mexico and the Administration leads a delayed, distracted, and detached response effort.  As described below, Democrats are pursuing policies which would increase the price of energy for American families and businesses and exacerbate U.S. dependence on unstable foreign sources of energy, all for negligible—if not negative—environmental benefit.

Cap-and-Tax Still Alive and Kicking:  On June 29, 2010, President Obama met with several senators at the White House to reiterate his desire to sign a climate bill which includes carbon dioxide emissions cap, such as the Waxman-Markey or Kerry-Lieberman bills.  As White House press secretary Robert Gibbs put it, “the president reiterated his position that putting a price on carbon” is the “right policy.”  Coming on the heels of his national Oval Office address to discuss the BP oil spill, one-third of which was devoted to marketing an unrelated climate bill, it is clear that Washington Democrats are determined to pass cap-and-tax legislation in the 111^th Congress.  Energy and Commerce Committee Chairman Henry Waxman (D-CA) says that he will “absolutely” seek to keep greenhouse gas caps alive in any House-Senate conference on energy legislation, if the Senate is unable to pass caps in its climate bill.

Cap-and-tax bills like Waxman-Markey and Kerry-Lieberman would amount to a national energy tax if enacted. This national energy tax would increase energy costs and kill jobs while unemployment stands at almost 10 percent.  Independent researchers, the nonpartisan Congressional Budget Office, and President Obama have all agreed that this cost will be passed to consumers.  Under any cap-and-tax system, facilities that emit greenhouse gases, such as power plants and manufacturers, would purchase credits for their emissions from the government.  The cost of these credits for businesses would be passed on to consumers in the form of higher electric bills and more expensive products.  For example, a recent report shows that the Kerry-Lieberman climate bill would amount to a $3.4 trillion gas tax.  This total includes a $1.9 trillion tax on gasoline, a $1.1 trillion tax on diesel and a $425 billion tax on jet fuel.  The gas tax would start around $0.15 per gallon and rise to about $0.60 per gallon. 

Of course, without the cooperation of developing countries like China and India global temperature reduction goals of cap-and-tax proponents cannot be attained.  According to an MIT study, "with rapid growth in developing countries, failure to control their emissions could lead to a substantial increase in global temperature even if the U.S. and other developed countries pursue stringent policies."  China and India have repeatedly warned that they have no intention of restricting their emissions. 

Democrats’ New Anti-Energy Initiatives:  Even while oil continues to spill into the Gulf and ongoing investigations seek to determine what went wrong to cause the disaster, Congressional Democrats are tripping over themselves to legislate during a crisis.  As Natural Resources Committee Ranking Member Doc Hastings (R-WA) recently noted, “If all of us were to ask ourselves if we believe we have all of the facts and information necessary to know exactly what changes need to be made in offshore drilling, the only honest answer is no.”  Nonetheless, below are just some of the recent Democrat initiatives to increase the price of energy on American families and lower the U.S. energy supply.

• Several House Ways and Means Committee Democrats introduced legislation to raise taxes by $30 billion on energy companies, reportedly as a means to pay for a “green jobs” bill that committee is working on.  This tax increase would be passed through to American consumers in the form of higher gas, electric, and product prices.
  
  
• Senator Robert Menendez (D-NJ) has promoted legislation to eliminate oil spill liability caps and has mocked more modest liability increase proposals.  Members may be concerned that such a major liability increase would drastically increase insurance costs and essentially restrict offshore exploration to only the largest oil companies, causing job loss among smaller and independent producers.  Moreover, this may well be unnecessary because under current law if a responsible party is found to be grossly negligent, engaged in willful misconduct or to have violated regulations the responsible parties are already responsible for all costs.

• Rep. George Miller (D-CA) is drafting legislation to deny BP any new offshore exploration leases for up to seven years.  The legislation would also target other companies—the sponsor’s startlingly vague summary of the bill states that “the Secretary of the Interior could not issue offshore oil and gas leases to a company the Secretary determines is a danger to workers and natural resources.”  Of course, this legislation would kill jobs and lower the supply of energy produced in the U.S. as companies are barred from developing American energy resources.

Moratorium Hurting Economy and Energy Independence:  Purportedly as a response to the Gulf oil spill, in May 2010, President Obama imposed a six-month deepwater drilling moratorium rife with foreseeable negative consequences.  The moratorium has suspended activity at all 33 rigs developing exploratory deepwater wells in the Gulf of Mexico.  The moratorium is also a de facto ban on shallow water exploration, as no shallow leases have since been issued.  Although the moratorium is currently in a state of legal limbo, it is already having disastrous effects on U.S. energy independence and the economy of the Gulf region.

On June 28, 2010, energy executives informed Interior Secretary Salazar that they are moving deepwater drilling rigs out of the Gulf of Mexico to West Africa and the Middle East due to the anti-energy drilling moratorium.  This means that Americans will become even more reliant on energy produced in unstable and often adversarial foreign countries and transported thousands of miles to the U.S. on tankers that have historically accounted for more spills than drilling platforms.

In addition to increasing U.S. energy dependence and increasing the risk of another spill, the Obama moratorium continues to wreak economic havoc on the Gulf Coast during a recession.  The ban has created new hardships for hundreds of companies directly and indirectly involved in deepwater drilling, including those that supply steel tubing, engineering services, drilling crews and boats. 

Louisiana alone has already lost 20,000 to 30,000 jobs and $150 million in wages—over the next six months the state could lose another $425 million in wages, according to the U.S. Chamber of Commerce.  Unfortunately, the loss to the region will likely extend past the six-month ban, as the rigs which leave the Gulf and will likely not return for years.

The President has raised questions about the long-term necessity for drilling.  According to the Heritage Foundation, between now and 2035 an outright offshore drilling ban would reduce GDP by $5.5 trillion, reduce job growth by more than 1 million jobs by 2015 and more than 1.5 million jobs by 2030, and increase expenditures for imported oil by nearly $737 billion.

Obama Administration Delays New Leases:  On June 30, 2010, the Interior Department delayed planning for a new five-year offshore leasing plan that could potentially lead to domestic exploration for natural resources.  The public meetings on the plan were postponed and the Administration announced that there will be another comment period on the plan later this year.  The delayed plan was introduced by the Administration in March 2010, and as the Natural Resources Committee Republicans have detailed, the plan puts 13.14 billion barrels of oil and 41.49 trillion cubic feet of natural gas under lock and key and included only two actual lease sales, one in Virginia and one in Alaska, both of which would be delayed from 2011 to 2012.  This development is a clear signal that the Administration is unwilling to pursue even modest increases in offshore American energy development moving forward.

Cap-and-trade will not cap the well.  President Obama and Congressional Democrats should not exploit the Gulf oil spill disaster to advance anti-energy initiatives which will not stop the well from leaking but will raise the cost of energy on every American and stunt economic recovery.  Congress must resist the urge to legislate out of panic until the facts about this incident are known.  Republicans and the American people continue to support an “all of the above” energy policy that promotes  energy independence, job creation, and a cleaner environment through greater efficiency, developing nuclear, renewable and alternative sources, and the expanded, environmentally-responsible development of  America’s energy resources.