We’re officially in summer driving season and approaching the anniversary of historic oil and gas prices. We’ll see if the anniversary or other circumstances serve to cure Congress of its political amnesia, when it comes to the urgency of a comprehensive energy security policy in general and the need for domestic supply as part of that solution in particular.

Saudi Oil Minister Ali Naimi’s remarks this week helped boost oil prices in advance of the latest OPEC meeting. He forecasted increased demand and a return to $75-80 oil. Then, at the OPEC meeting, the organization decided to keep crude production quotas unchanged. Now oil has crossed $65 for the first time in 2009 and a pair of new economic reports contained promising economic news. Retail gas prices have ticked higher each day during May.

Finishing up Memorial Day recess, House Democrats are seeking a large increase in minimum royalty rates on production from federal oil and gas leases. The draft legislation, circulated by Natural Resources Chairman Nick Rahall (D-WV), is thought to be in line with Obama Administration’s stance on royalties. Pro-supply forces fear that this measure would have the most immediate impact on onshore production and caution that it would serve as a disincentive to produce oil and natural gas in the Inter-Mountain West (Colorado, Utah, Montana, Wyoming, New Mexico), where the federal government owns much of the land.

This measure would also cut maximum onshore and offshore lease length from 10 to 5 years; industry experts warn that shorter lease terms and higher royalty rates would dissuade companies from bidding on marginal or challenging projects. In addition, the bill seeks to merge the Minerals Management Service and the Bureau of Land Management in an effort to streamline leasing; a new Office of Federal Energy and Minerals Leasing would develop national 5-year leasing plans.

In the meantime, the Senate Energy and Natural Resources Committee is poised to return to its markup by considering oil and gas development measures next Thursday, June 4.

Thus far in 2009, energy security has too often been relegated to the backseat, with climate policy in the driver’s seat. While the topics of energy and climate policy are closely related, they are not synonymous, and we are tempting fate if our leaders continue to act like last summer never happened.

Previous Post  

Next Post

Diplomatic Council Launch and Release of Oil and the Trade Deficit
May 17, 2012

Increased domestic production = increased energy security
May 16, 2012

WaPo mostly right on energy security
May 14, 2012