U.S. House of Representatives approves offshore drilling

The U.S. House of Representatives voted late Tuesday to open waters off the Atlantic and Pacific coasts to oil and gas drilling but only 80 or more kilometres out to sea and only if a state agrees to energy development off its shore.

Democratic leaders called it a step toward energy independence, but Republicans labelled it a "sham" because most of the estimated 18 billion barrels of oil believed to lie below off-limits coastal waters are within 80 kilometres of land and will remain out of bounds.

The measure passed in a largely party-line vote of 236-189 in Washington. It now goes to the Senate, where energy will be the topic later in the week. Thirteen Democrats bucked their leadership and voted against the measure.

Even before the House vote, the White House said U.S. President George W. Bush was prepared to veto the measure should it reach his desk. An administration statement said the bill would "stifle development" of offshore energy resources by essentially making permanent drilling bans within the 80-kilometre coastal buffer, while imposing new taxes on the largest oil companies.

But House Speaker Nancy Pelosi, D-Calif., said the bill "represents a new direction in energy policy" and a "bold step forward that will end our dependence on foreign oil" by using billions of dollars collected in taxes on large oil companies to promote alternative fuels and energy efficiency.

Republicans called the drilling measure a ruse to provide political cover to Democrats feeling pressure to support more drilling at a time of high gas prices.

"How much new drilling do we get out of this bill? It's zero. Just zero," declared House Republican leader John Boehner of Ohio. "It's a hoax on the American people. This is intended for one reason … so the Democrats can say we voted on energy."

The measure would allow drilling in waters 80 kilometres from shore almost everywhere from New England to Washington state as long as a state agrees to go along with energy development off its coast. Beyond 160 kilometres, no state approval would be required. The drilling ban would remain in the eastern Gulf of Mexico.

Each year for the past 26 years, Congress has passed drilling bans on the Atlantic and Pacific coasts because of environmental concerns and pressure from some coastal states worried that drilling might hurt the tourist business.

Unlike bills offered by House Republicans and others being considered in the Senate, the House-passed legislation would not share royalties from energy production with the adjacent states. Boehner said without royalty sharing, states probably would not opt for drilling off their beaches.

Republicans also cited Interior Department estimates that 88 per cent of the 18 billion barrels of oil believed to be in waters now under drilling bans would remain off-limits because they are within the 80-kilometre protective coastal buffer.

The House voted to roll back nearly $18 billion in tax breaks over 10 years for the five largest oil companies and require energy companies to pay billions of dollars in royalties they avoided because of an Interior Department contracting error.

The bill also would require the president to make available oil from the government's Strategic Petroleum Reserve. Pelosi said such a move is needed to drive down gasoline prices, even though oil prices have dropped dramatically in recent weeks and many energy experts believe gasoline prices will fall as well after refineries recover from Hurricane Ike.

Democrats added a provision at the last minute that makes it a federal crime for oil companies with federal leases to provide gifts to government employees, a response to a recent sex and drug scandal involving the federal office that oversees the offshore oil royalty program and energy company employees.

The Democratic bill also would:

• Provide tax credits for wind and solar energy industries, the development of cellulose ethanol and other biofuels.
• Require utilities nationwide to generate 15 per cent of their electricity from solar, wind or other alternative energy source.
• Give tax breaks for new energy efficiency programs, including the use of improved building codes and for companies that promote their employees' use of bicycles for commuting.

Expanded offshore drilling has become a mantra of GOP energy policy that has been felt on the presidential and congressional campaign trails despite wide agreement that lifting the drilling ban would have little if any impact on gasoline prices or produce any oil for years.

Republican presidential candidate John McCain pledged at the recently concluded GOP convention to push for new offshore oil and gas drilling amid delegate chants of "Drill, baby drill" and his Democratic rival, Barack Obama, said he supported more drilling as part of a broader energy package.

But Democrats derided what they called Republicans' "drill only" response to the country's energy problems.

"America needs an oil change," said Rep. Edward Markey, D-Mass. "They keep saying on the Republican side, 'Drill, baby, drill!' What we're saying is 'Change, baby, change!' and they can't change."