Washington (Dow Jones Newswires), June 26, 2008
The White House threatened to veto so-called "use it or lose it" legislation on oil and gas leases, saying the measure would push gasoline prices higher, damage U.S. energy security and discourage investment in domestic energy.
Sponsored by Rep. Nick Rahall, D-W.Va., the House bill is designed to prod companies into developing unused oil and gas exploration and production leases. The legislation would prohibit new leases for firms that aren't "diligently developing" existing leases.
The measure is part of the broader debate over soaring gasoline prices, and marks the philosophical divide between the Bush administration and congressional Democrats. Bush and GOP lawmakers have called for the nearly three-decade ban on offshore U.S. drilling to be lifted, while Democrats want energy companies to take advantage of all the areas they currently have access to.
In a statement of administration policy, the Office of Management and Budget said the idea that leaseholders are "sitting on" leases rather than using them is an "absurd claim" as oil prices hover near record highs.
"Firms want to drill where they can most profitably extract oil," the OMB said. "A firm that is not drilling in a particular area either cannot find recoverable oil there, or thinks it can find oil that can be extracted at lower cost, or has not yet completed the more than a dozen plans and permits needed to allow drilling," it said.
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