Gulf Oil Spill Reshaping Energy Debate in Congress

The oil leak spreading 5,000 barrels of crude a day in the Gulf of Mexico is reshaping the politics of the energy debate as Congress considers U.S. climate policy and lawmakers brace for the November elections.

California Governor Arnold Schwarzenegger, a Republican, withdrew his support for offshore oil drilling yesterday, following a similar move by Florida Governor Charlie Crist, who raised doubts about environmental safety. One official who said the drilling should continue is former Alaska Governor Sarah Palin, the 2008 Republican vice presidential nominee.

In 2008, Republicans made expanded offshore oil and gas exploration central to their presidential campaign platform, punctuated by chants of “drill, baby, drill.”

“This is a really major setback both for climate and, of course, also on energy policy,” Daniel Yergin, chairman of IHS-Cambridge Energy Research Associates, said in a Bloomberg Radio interview yesterday. “Everything now is obviously on hold.”

The leak began after an April 20 explosion on the Deepwater Horizon, an offshore drilling rig owned by Transocean Ltd. and leased by London-based BP Plc. The rig sank two days later and the oil has spread to within five to 10 miles of the Louisiana coast, threatening the region’s fishermen, shrimpers and oystermen.

Photographer: Joe Raedle/Getty Images

Workers lay down an oil boom as the effort continues to try and keep the massive oil spill in the Gulf of Mexico from washing ashore yesterday in Pascagoula, Mississippi. Close

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Photographer: Joe Raedle/Getty Images

Workers lay down an oil boom as the effort continues to try and keep the massive oil spill in the Gulf of Mexico from washing ashore yesterday in Pascagoula, Mississippi.

BP Chief Executive

BP Chief Executive Officer Tony Hayward met with Obama administration officials yesterday to discuss how to manage the spill. Hayward and BP America Chairman Lamar McKay had talks with Homeland Security Secretary Janet Napolitano, Interior Secretary Ken Salazar, Energy Secretary Steven Chu and Environmental Protection Agency Administrator Lisa Jackson, said a White House statement.

The government officials requested an update on “how BP plans to ensure an effective response” in affected Gulf Coast states, according to the statement.

“It was a very constructive dialogue,” Hayward told reporters afterward.

Hayward claimed responsibility for the disaster on behalf of BP during an interview yesterday on NBC’s “Today” program and vowed to clean up the spill in tandem with the U.S. government. Engineers are working to cap the leak.

Officials from BP and Transocean will hold a closed session today with members of the House Energy and Commerce committee, said an aide to Representative Edward Markey, a Massachusetts Democrat who will lead the meeting. Transocean President Steve Newman plans to meet tomorrow with staff for Senator Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy and Natural Resources panel, said Murkowski’s spokesman, Robert Dillon.

Photographer: Joe Raedle/Getty Images

Florida Governor Charlie Crist announces that he will make an independent bid for the open U.S. Senate seat in St. Petersburg, Florida, on Thursday. Close

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Photographer: Joe Raedle/Getty Images

Florida Governor Charlie Crist announces that he will make an independent bid for the open U.S. Senate seat in St. Petersburg, Florida, on Thursday.

Committees to Investigate

At least three committees -- House Energy and Commerce, House Natural Resources, and Senate Energy and Natural Resources -- plan hearings to investigate the spill during the next month.

Obama on March 31 agreed to open new sections of the Atlantic coastline and the eastern Gulf of Mexico to new underwater drilling. Administration officials hoped the move would help win Republican support for a climate bill that has languished in the Senate since passing the House of Representatives last June.

“From the standpoint of energy independence, in the transitional period, domestic drilling is one of the things that we ought to look at,” said senior Obama adviser David Axelrod. “That hasn’t changed.”

The spill now threatens any deal.

Santa Barbara Spill

“It could have as big an impact as Santa Barbara,” said Philip Verleger, an oil industry expert, referring to the 1969 oil spill off the California coast that reshaped the country’s environmental policy and was the catalyst for the first Earth Day in 1970. “This is a big setback,” he said.

The Gulf of Mexico leak solidifies a division in the Senate between Republicans and Democrats on one side who favor more domestic oil and gas exploration, and Democrats who don’t.

“To get my vote, any energy or climate bill must prohibit drilling in places where a spill could reach New Jersey’s waters,” said Senator Frank Lautenberg, a New Jersey Democrat.

In one respect, “it really hastens the debate” over an energy bill,” said Dick Durbin of Illinois, the second-ranking Senate Democrat. On the other hand, the safety of offshore drilling now becomes paramount, he said.

“It’s a hard case to make until you get down to the safety issues,” Durbin said.

Safety Standards

Durbin said he expects the administration to offer new safety standards for offshore drilling.

South Carolina Republican Lindsey Graham, who has been working with Senators John Kerry, a Massachusetts Democrat, and Connecticut independent Joe Lieberman on a bipartisan compromise, cautioned against making too much of the spill.

“We’ve had problems with car design, but you don’t stop driving,” Graham said in Greenville, South Carolina, on April 30, according to the Greenville News. “The biggest beneficiaries of this proposal to stop drilling would be overseas oil interests, OPEC and regions that don’t like us very much.”

Crist, a longtime Republican running for the U.S. Senate as an independent, withdrew his support for offshore drilling during a May 2 interview on NBC’s “Meet the Press.”

Palin said the spill shouldn’t deter drilling. On her Facebook page yesterday, she expressed sympathy over the accident, while saying she still believes in the slogan “drill here, drill now.”

To contact the reporters on this story: Patrick O’Connor in Washington at poconnor14@bloomberg.net; Lisa Lerer in Washington at llerer@bloomberg.net

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