House GOP, Industrial Customers Push to Keep OCS, ANWR in Budget Bill

Forty-one House Republicans have signaled they may vote against the deficit-reduction package this week if critical energy provisions -- namely, the development of the coastal plain area of the Arctic National Wildlife Refuge (ANWR) and leasing in currently protected offshore areas -- are removed from the bill.

In a related development, officials from key manufacturing and agricultural groups banded together in Washington, DC, Tuesday to support the inclusion of language in the House $53.9 billion deficit-reduction bill that would open ANWR to energy development for the first time and promote expanded leasing on the federal Outer Continental Shelf (OCS).

"We would have very serious concerns about a deficit-reduction package that fails to include these measures to increase energy supplies when our constituents are begging us to do something to provide relief from high [energy] prices," the House GOP lawmakers said in a letter that was sent to Speaker J. Dennis Hastert (R-IL) Monday.

The House Budget Committee voted out a bill last week that called for both ANWR and expanded OCS development to be incorporated in the broader House deficit-reduction package. The energy measures had been offered by the House Resources Committee, chaired by Rep. Richard Pombo (R-CA).

The House Resources' proposal "begins to solve the problem of shortages by allowing coastal states to increase their input into oil and gas leasing in waters off their shores while encouraging more domestic energy production," they said. "It includes as the keystone component of its savings the $2.5 billion raised by the leasing of a small portion of ANWR in Alaska."

The letter by the 41 Republicans was in response to an earlier threat by a group of moderate Republicans to vote against the House deficit-reduction package if ANWR remains part of the package. Following a favorable vote by the Senate last week to open ANWR, House leaders indicated they might drop ANWR from the deficit-reduction package to attract the votes of the moderate Republicans who are opposed to ANWR being included in the bill, and restore ANWR later during conference negotiations (see Daily GPI, Nov. 4).

"We strongly urge you to support the pro-energy provisions in the Resources Committee reconciliation package...We need the money, we need the energy and we need the policy changes," the Republican lawmakers told Hastert this week. "We further request that if you are contemplating changes to the Resources' package, you meet with the Western Caucus so that we might present out strong feelings for the ANWR and OCS provisions in person," they said.

"This is not the right time to back off good energy and economic policy," the House Republicans warned.

On top of the threats from Republicans, House Minority leader Nancy Pelosi (D-CA) has said all House Democrats would vote against the deficit-cutting package, according to Congressional Quarterly's Green Sheets. This would leave Republicans with little wiggle room to maneuver. Twenty-nine House Republicans voted against ANWR drilling earlier this year, but the provision survived with the support of 30 Democrats, it noted.

At a briefing at the National Press Club Tuesday, major industrial and agricultural groups expressed their strong support for the Pombo proposals to expand OCS leasing and open ANWR to ease spiraling natural gas prices. They opposed congressional efforts to impose a windfall profits tax on oil companies, saying this "[was] not the right answer."

If Congress were to open currently unavailable areas of Lease 181 in the eastern Gulf of Mexico to producers, supply "[could] get into the system in 18 months," said Jay Timmons, assistant vice president of the National Association of Manufacturers.

"Equally or more important is the signal that [this] will send to the marketplace" almost immediately, said one industrial representative. It would "begin to balance and temper the volatility" in the natural gas market. "I think a perfect storm is brewing this winter," which could result in an "economic holocaust," said W. Henson Moore, president and CEO of the American Forest and Paper Association. However, the nation could get out of this if Congress votes to remove restrictions on leasing on the OCS, he noted.

"Now is the time to reverse 25 years of policy" that has put 85% of the OCS off-limits to producers, said Jack Gerard, president and CEO of the American Chemistry Council. The Energy Policy Act, which President Bush signed into law in August, was a "good start," but it "lacks the key supply component," he told reporters.

Absent quick action by Congress, the associations said the high natural gas prices will continue to take a toll on the industries that they represent. Gerard noted that more than 100 chemical facilities have closed in the U.S. in the past of couple of years due to escalating gas prices, forcing lay-offs in excess of 100,000 workers. Of the 121 new chemical plants that are expected to be built worldwide, only one is slated for the U.S., he said.

Fletcher Steele, president of Pine Hall Brick Co. in Winston-Salem, NC, said his natural gas bill has increased $700,000 per month from August to October, and that he tentatively plans to shut down up to half of his capacity in January.

Since 2002, 36% of the plants that make the natural-gas intensive nitrogen fertilizer, which is used by nearly all farmers, have shut down or been mothballed, driving up fertilizer prices for farmers and food prices for the American consumer, said Samantha Slater, who represented the Agricultural Energy Alliance.

Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.


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