Democrats and fiscal conservatives today blasted a Republican plan to expand oil and gas drilling nationwide as a way to pay for building new bridges and roads.
Rep. Ed Markey, D-Mass., said the proposal “is nothing more than the same drilling proposals (Republicans have) offered time and time again,” only this time dressed up as a revenue-raiser, even though the royalties from expanded onshore and offshore drilling is far less than what is needed to pay for federal transportation programs.
These “drilling bills would barely get us started down the road of paying for a transportation bill,” Markey said, adding that the Republican proposal “would only generate one-fifteenth of the revenue that we would need to fund transportation projects for the next six years.”
Markey’s comments came during a House Natural Resources subcommittee hearing on a suite of GOP bills that aim to allow drilling in the Arctic National Wildlife Refuge, open up the Atlantic and Pacific oceans for development and force the government to issue commercial leases for oil shale development on public lands.
Republicans are linking the pro-drilling measures with a plan to reauthorize funding for federal transportation programs that are otherwise set to expire early next year. By drawing on oil and gas royalties, the GOP aims to fill a big gap between the cost of nationwide transportation projects and the diminishing revenues collected from a gasoline tax that fills the federal highway trust fund.
Rep. Doc Hastings, R-Wash., the House Natural Resources Committee chairman, acknowledged there isn’t yet a formal estimate of the potential federal royalties from proposed drilling, but he insisted that the alternative of “doing nothing will not create any new jobs or generate any new revenue.”
“During these difficult economic times, with soaring debts and deficits and a highway fund that needs to be replenished, Congress should not pass up an opportunity to create jobs and generate billions in new revenue,” Hastings said. “The revenue from these projects will make a significant contribution to help fund America’s roads and bridges.”
Rep. Doug Lamborn, R-Colo., noted that oil and gas resources lurking underneath federal lands and waters “are the property of the American people,” but their value is locked up as long as those areas are off limits.
But Ryan Alexander, head of the Taxpayers for Common Sense, said it would be fiscally irresponsible for Congress to link spending on highways with speculative revenues from energy production that may never pay off as promised.
“Simply making more federal lands available or limiting regulations on resource extraction is not a solution to our nation’s debt crisis and could lead to greater taxpayer liabilities down the road,” she said. The GOP approach “relies on speculative future revenues derived from new offshore drilling leases. Paying for a couple years of transportation funding with expected revenues from an increase in oil and gas drilling that will likely take many years to get rolling is not a responsible budget approach.”
Alexander likened the approach to “buying the Ferrari tomorrow because you are sure a raise is coming sometime in the future.”
One of the measures, drafted by Lamborn, is aimed at spurring research and commercial development of kerogen from oil shale. Shell, Exxon and other companies have done research on ways to produce oil shale, but it hasn’t been proven commercially viable after decades of attempts.
The Bush administration leased federal lands in Colorado, Utah and Wyoming for oil shale projects, but under President Barack Obama, the Interior Department reversed course on those leases two years ago. Ultimately, the Interior Department announced it would allow smaller, experimental oil shale leases in the region, with the goal of testing extraction practices that could eventually be rolled out commercially.
Critics say that given decades of failed attempts, the oil sands are still years — at best — away from being commercially produced, and so it doesn’t make sense to count on getting any federal royalties from the work anytime soon.
“Retrieving oil from shale may be a way to produce more domestic energy, but the technology to retrieve it in a cost competitive fashion does not currently exist,” Alexander said. “Taxpayers should not bear the financial consequences of this risky prospect. Research and development on federal lands is already occurring, and fast-tracking to commercial leasing before a technology is developed is a high risk taxpayers cannot afford.”
Bill Eikenberry, a third-generation Wyoming rancher and former state lands manager said there just are “too many headwinds associated with oil shale.”
“Oil shale is just an opportunity to fuel Wall Street-style speculation on our public lands,” he told the subcommittee in prepared testimony. “Without the breakthrough in technology for commercial oil shale development, which industry says is at least a decade or more away, there are no jobs, there is no energy and there is no revenue in oil shale.”
But Lamborn countered that there is no harm in letting companies try their hand at producing oil sands, so long as “they’re investing their own money.” If it doesn’t pan out, it doesn’t hurt American taxpayers, he said. But at least then there’s a chance that oil sands technology can be scaled up and commercialized to tap an estimated 1.5 trillion barrels of oil equivalent in the region, Lamborn said.
Another measure by Rep. Steve Stivers, R-Ohio, would force the government to sell drilling leases in parts of the Pacific and Atlantic oceans, while also lifting a congressional ban on exploration in the eastern Gulf of Mexico.
That statutory ban bars drilling in the eastern Gulf through 2022, unless Congress changes the law. The Obama administration also is not planning on selling any new drilling rights in the Pacific or Atlantic oceans from 2012 through 2017, the next five-year leasing period for the outer continental shelf.
Erik Milito, the upstream director of the American Petroleum Institute, said the plan would “deliver more jobs for Americans, more revenue for our government and greater energy security — while providing a reliable source for the fuels consumers and businesses use in their homes, vehicles and factories and for the petrochemicals used in everything from our clothing to our iPhones to our computers and pharmaceuticals.”