No Compromise on Offshore Oil

While President Bush and Republicans are beating the drums daily for more oil and gas production, Democrats are finally starting to crack and offer compromises, with even Democratic standard-bearer Barack Obama softening his position.  Democrats see the polls and they know that this is the one issue that threatens their otherwise commanding position heading into the elections.  Conservatives may be tempted to accept a compromise for the sake of an important policy victory, but they can do better.  A full, no-compromise victory is now less than two months away, if supporters of domestic energy production can just stick together and defend the current law.

President Bush should announce that offshore oil leasing will commence on October 1st, 2008, the day after the current Congressional ban expires.  He should make clear to Democrats that he will veto any legislation to impose a new ban in October, even if Democrats attach it to so-called “must pass” legislation to keep the government open.  In other words, he should dare the Democratic Congress to shut down the federal government in order to stop offshore oil leasing.

Congress has never seen fit to enact a permanent moratorium on offshore drilling, opting instead for a series of one-year bans, with this year’s ban ending with the current fiscal year at the end of September.  It is opponents of drilling then who are in a position to need a vote on legislation to impose a new ban for fiscal 2009.  President Bush, with his veto pen, is in a position to stop them, and there is no good reason for him to cave in. 

First, we need the oil and gas.  According to the conservative estimates from the Department of the Interior’s Mineral Management Service, the Outer Continental Shelf (the area where offshore drilling would take place) contains 86 billion barrels of oil and 420 trillion cubic feet of natural gas.  Until the end of September, 97 percent of that area is subject to Congress’s ban on offshore exploration and production.  The perception of substantial new production coming in the near future would break the expectations of future price increases in the futures markets and lower prices at the pump, which we already saw a preview on when President Bush lifted the executive branch’s own prohibition of offshore drilling.

Secondly, a showdown on this issue is a political winner for Republicans—which is precisely why Democrats are scrambling to avoid one.  Democrats initially thought they could avoid the issue by shutting down work in the Appropriations Committees, which usually include an annual ban in the Interior Appropriations bill.  They will now likely to pursue a continuing resolution to keep government running until after the election.  They would use the continuing resolution to sneak through an extension of the drilling ban.  President Bush should make clear that he won’t sign any such extension.   That would put the ball in Democrats’ court to decide whether stopping offshore oil drilling is worth shutting down the federal government.

If they decide it is, just weeks before Election Day, the dynamics of the elections will be dramatically transformed.  Energy will no longer be one of several top tier issues.  It will become the only issue.  And it will become the only issue at a time when Republicans have little else going for them.  Polls show that as prices have climbed at the pump, the public support for offshore oil drilling has climbed too, now reaching as much as 75 percent, an overwhelming majority.  A national referendum on offshore oil drilling is an election that Republicans should win.  Faced with that prospect, opponents of drilling are much more likely to back down and allow production of domestic energy to commence.

If Democrats do opt for the shutdown, it would cost them politically.  Some will argue that President Bush and Republicans would be blamed for causing a government shutdown, worsening the already poor electoral outlook for the party.  That possibility is unlikely, however, because of the facts of the situation.  Just as Newt Gingrich was blamed for shutting down the government when he refused to accede to President Clinton, this would be an example of Congressional obstinacy in the face of clear direction from the White House, exercising his veto authority under the U.S. Constitution.  Moreover, in this case the president would merely be defending the continuation of existing law, which calls for drilling to be permitted come October.  It would be Democrats insisting on the imposition of a new offshore ban that flies in the face of public opinion.

This high-stakes strategy may not be as much as a gamble as it appears.  Most analysts believe Republicans are already set to take heavy losses this year.  Betting the election on the energy issue through a forced showdown on offshore drilling, even in the worst case scenario, is unlikely to make the already bleak outlook any worse. 

Americans are straining under the burden of sky-high gasoline prices, and are eager for measures to increase domestic production.  A compromise deal may be tempting, but there is a clear path to an outright policy victory that should be pursued instead.  The public has no appetite for a new ban on offshore oil drilling, and President Bush can make crystal clear that he will not sign one into law.  It’s not just good politics—it’s also likely to lead to a much-needed policy victory.