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Archive for Monday, July 31, 2006

Senate voting on offshore drilling

July 31, 2006

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— The Senate was expected to vote today on whether to expand oil and gas drilling to 8.3 million acres of Gulf waters off-limits to energy development for a quarter-century. The House has passed a broader bill dealing with offshore drilling.

Hundreds of business owners, in letters to members of Congress, have urged an end to the freeze that has barred oil and gas drilling off 85 percent of the country's coast. Lobbying powerhouses such as the Washington-based National Association of Manufacturers, U.S. Chamber of Commerce and National Chemistry Council have led the drive.

Costing about $2 per thousand cubic feet only a few years ago, natural gas soared to as high as $15 late last year. This spring and summer it retreated to below $6 but has risen in the past month because of greater demand for air conditioning brought on by the intense heat across the United States.

The natural gas bill for chemical companies has jumped from $7.5 billion in 1999 to $30 billion last year, and some companies are expanding overseas where gas is cheaper, says Jack Gerard, president of the American Chemistry Council, the industry trade group.

Other energy-intensive business sectors including forest and paper, pesticide, aluminum and makers of carpets, bedding and furniture are being hit hard, he says.

The U.S. uses about 22 trillion cubic feet a year for everything from making plastics and fertilizer to producing electricity and heating homes. Supplies have struggled to keep up with demand.

Large amounts of gas are beneath offshore waters. But for 25 years lawmakers have feared tampering with the freeze on oil and gas drilling that Congress has put in place every year, covering 85 percent of the country's coastal waters - almost everywhere outside the western Gulf of Mexico.

That may soon change.

Senators planned to vote on whether to expand oil and gas development in the east-central Gulf, opening up 8.3 million acres for drilling.

Last month, the House approved an even broader measure that would lift the quarter-century drilling freeze in Pacific and Atlantic coastal waters, although states could prohibit drilling if they choose to do so.

"In a nutshell, this bill is good for the people who are burdened with the high cost of natural gas, the high cost of oil. It is their property. We ought to develop it and do it now," says Sen. Pete Domenici, R-N.M., the Senate bill's main sponsor.

Many environmentalists - as well as senators from coastal states such as New Jersey, California and Florida - fear the drilling will raise the risk of oil spills and threaten fragile ecosystems and tourism.

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