Oil Industry Complains about Gang-of-20 Compromise

The former Gang-of-10 compromise, which has since expanded to 16 and then 20 US Senators, proposes to swap limited offshore drilling for an increase in renewable energy support.

The Gang-of-20 bill severely limits offshore drilling to a handful of Southeastern states that must opt in to allow increased drilling, and moves the drilling boundary to 100 miles offshore (from its current 200 miles) “with states given the option to set it at 50 miles.”

Some oil industry representatives question the effect of the proposals, citing federal studies that show that more than 80% of known oil reserves are inside the 50-mile limit and therefore unavailable. Very little is known about oil reserves beyond 100 miles. Waters off almost the entire Pacific coast — where all three governors oppose drilling at the 50-mile barrier — is considered too deep for drilling 100 miles offshore.

“You would just open a door to an empty room at the end of a very long hallway,” said Brian Kennedy, spokesman for the Institute for Energy Research, an organization funded by the oil industry. Kennedy also said that, without some sort of revenue sharing for state governments, there would be little incentive for states to approve additional drilling.

The compromise contains a 5-year extension of the renewable energy tax credits, which are key to the growth of the renewable energy industry. The bill would invest $84 billion in conservation and efficiency, which will be fully offset with loophole closers and other revenues. Approximately $30 billion will come from new revenues from the oil and gas industry through such measures as repealing a tax break for oil companies which Democrats have long sought. The bill also funds

• A $20 billion “Apollo Project” like effort to support the goal of transitioning 85% of America’s new motor vehicles to non- petroleum-based fuels within 20 years;
• $7.5 billion for R&D focused on the major technological barriers to alternative fuel vehicles, such as advanced batteries;
• $7.5 billion to help U.S. automakers and parts makers re-tool and re-equip to become the world leader in making alternative fuel vehicles;
• Consumer tax credits of up to $7,500 per vehicle to incentivize Americans to purchase advanced alternative fuel vehicles (those that run primarily on non-petroleum fuels) and up to $2,500 to retrofit existing vehicles with advanced alternative fuel engines;
• New consumer tax credits of up to $2,500 to purchase highly fuel efficient vehicles, to help Americans reduce their annual gas costs and reduce oil imports;
• Extending and expanding the $2,500 tax credit for hybrid electric vehicles;
• $500 million for R&D into new materials and other innovations to improve vehicle fuel efficiency;
• $2.5 billion in R,D&D on next generation biofuels and infrastructure;
• Tax incentives for the installation of alternative fueling stations, pipelines and other infrastructure;
• Expanding transmission capacity for power from renewable sources;
• New dedicated funding for the weatherization assistance program;
• Provides grants and loan guarantees for the development of coal-to-liquid fuel plants with carbon capture capability. Plants must have lifecycle greenhouse gas emissions below those of the petroleum fuels they are replacing;
• Supports nuclear energy by increasing staff at the NRC, providing workforce training, accelerating depreciation for nuclear plants, and supporting R&D on spent fuel recycling to reduce nuclear waste;
• Provides a CO2 sequestration credit for use in enhanced oil recovery to increase production from existing oil wells while reducing greenhouse gas emissions.

That’s a pretty impressive list in exchange for just allowing a minimal amount of increased offshore drilling, although the coal-to-liquid provision is potentially environmentally dangerous. Senate Democrats in particular are trying to pursue this “all of the above” energy strategy in order to force Republicans to fund renewable energy projects, which thus far they have successfully blocked.

Sources: ClimateProgress, Washington Post

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