The Senate Energy Bill

(Hat Tip – Cong. Bill Cassidy via Twitter)

A summary of the Senate Energy Bill, which will likely be debated on the Senate Floor tomorrow, is summarized and analyzed here.  It is essentially another federal bureaucracy that generates a CBO estimated $22.2billion in gross revenue offset by $20.5billion in costs, of which $14billion will be litigation costs to defend lawsuits resulting from the taxes it contains.

But it does not contain carbon cap language, and it does not impose mandatory levels of electric generation from “green” fuels.  We won’t be surprised to see those resurrected during a lame duck session in November and December.


The bill contains a great deal of language addressing drilling on the Outer Continental Shelf, perhaps an attempt to suggest such drilling will be allowed, though the permitting procedures, inspection requirements, and safety impositions will certainly diminish, if not completely block, such activities.  Safety impositions include a requirement that the Chief Executive Officer of rig operating companies certify compliance with all safety regulations.

It also removes any limit of liability in the event of an incident, thus making it virtually impossible for smaller exploration companies to obtain insurance.

It also includes requirements that all drilling rigs to be built, owned and operated in the United States, which offers protectionism for union labor and will effectively drive away much drilling activity.

Of the $22.2billion in gross, $1.7billion net, revenue, $900million is allocated annually to the Land and Water Conservation Fund, and $150million each year to the Historic Preservation Fund.  Neither of these allocations would require further appropriation, both would be subject to the authority of Congress to determine eligibility of the activities on which the funds are spent, and neither provides any protection from their becoming Congressional earmarks.

The bill also makes provisions for environmental restoration of the Gulf Coast, but offers no allocation of funds for those activities.

Where do the revenues come from?  In addition to royalties from the leasing of federal land, the bill creates a new tax of $2 per barrel of oil and $0.20 per million BTU of natural gas produced, taxes which will inevitably be borne by the consumer.

This legislation will also effectively extend the Obamoratium indefinitely, as it increases taxes and regulation, allows the approval process for new exploration plans to be extended indefinitely, and imposes the aforementioned unlimited liability.

Lastly, though this is by no means a complete assessment of the legislation, the bill imposes its regulations on leases on state land, thus encroaching on the rights of the states to regulate drilling activity on their lands.

The bill does not include an amendment offered by Cong. Cassidy that would have created an independent body of technical experts from the engineering and science community to investigate the Deepwater Horizon catastrophe.  Democrats ripped that amendment out, because Captain Kickass has his own investigatory body of expert left-wing environmentalists (with no technical knowledge and a predisposition to oppose offshore drilling.  As Natural Resources Committee Ranking Member Doc Hastings (R-WA) said after that committee unanimously passed Cassidy’s amendment,

There is widespread agreement that no member of the President’s Commission possesses technical expertise in oil drilling, and several are on the record in opposition to offshore drilling and support a moratorium that will cost thousands of jobs.


This is not good legislation.  The Deepwater Horizon failures certainly need to be investigated and learned from so technology and safety can be improved.  Safety inspections likely need to be increased in frequency and intensity.  But legislation that creates an estimated $14billion in new litigation is not the way to do it.  This bill only helps union labor, trial lawyers, and pork loving politicians, while hurting the oil and gas industry and the American consumer of energy.

Oh, and before our more radical readers begin slinging mud about our inability to embrace anything the Obama administration attempts to do; the regulations and

bureaucratic restrictions apply to the creation of renewable energy facilities, such as solar and wind farms, on federal lands, just as they apply to oil and gas.



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