Arizona Republican John McCain Tuesday called for more energy conservation, but he said more nuclear power plants have to be built and the ban on offshore drilling in the United States should be lifted. The "next president must be willing to break with the energy policies not just of the current administration, but the administrations that preceded it, and lead a great national campaign to achieve energy security for America," McCain said in Houston.

Conservation is no longer a "moral luxury" or a "personal virtue," McCain said, an implicit criticism of Vice President Dick Cheney, who called conservation a "personal virtue" in 2001.

"In oil, gas and coal deposits we have enormous energy reserves of our own...and we are gaining the means to use these resources in cleaner, more responsible ways," said McCain. "As for offshore drilling, it's safe enough these days that not even hurricanes Katrina and Rita could cause significant spillage from the battered rigs off the coasts of New Orleans and Houston. Yet for reasons that become less convincing with every rise in the price of foreign oil, the federal government discourages offshore production."

McCain said that "with gasoline running at more than four bucks a gallon, many do not have the luxury of waiting on the far-off plans of futurists and politicians. We have proven oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production, and I believe it is time for the federal government to lift these restrictions and to put our own reserves to use."

In the speech, McCain renewed his call for new nuclear reactor construction in the United States. "One nation today has plans to build almost 50 new reactors by 2020. Another country plans to build 26 major nuclear stations. A third nation plans to build enough nuclear plants to meet one quarter of all the electricity needs of its people -- a population of more than a billion people. Those three countries are China, Russia and India. And if they have the vision to set and carry out great goals in energy policy, then why don't we?'"

Referring to comments by some energy experts that oil may eventually hit $200/bbl and U.S. consumers could pay up to $7 for a gallon of gas, McCain said, "Somehow the United States, in so many ways the most self-reliant of nations, has allowed and at times even encouraged this state of affairs. This was a troubling situation 35 years ago. It was an alarming situation 20 years ago. It is a dangerous situation today."

McCain first made public his position to lift the moratorium on offshore oil and natural gas drilling on Monday in Virginia. The ban should be lifted, he said, for "states that choose to permit exploration" off their coastlines.

"Right now there's a moratorium and [it has] to be lifted. I'm not dictating to the states that they drill for oil. I'm saying the moratorium should be lifted so states can choose that option if they want to," he said during a press briefing in Arlington, VA, according to the National Review. The federal government, he said, might have to offer "additional incentives...in terms of tangible financial rewards," such as a greater share of royalties, to those states that permit drilling off their shores. While current legislation pending in the House seeks to open the Outer Continental Shelf (OCS) beyond 50 miles from coastlines, McCain said he did not have a position at this time on the appropriate distance from shore that offshore drilling should be allowed to occur.

McCain's announcement came less than a week after a Republican proposal to lift the 27-year-old congressional ban on oil and natural gas leasing on most of the federal OCS was met with a wall of opposition from Democrats (see Daily GPI, June 12).

By 9-6, the House Interior Appropriations Subcommittee last Wednesday failed to approve an amendment offered by Rep. John Peterson (R-PA) as part of the Department of Interior and related agencies' spending bill for fiscal year 2009. The vote broke along party lines, with every Democrat on the subcommittee opposing the amendment. The measure sought to remove the congressional moratorium on oil and natural gas preleasing, leasing and associated activities in areas 50-200 miles from the East and West Coasts, as well as in the eastern Gulf of Mexico.

Peterson, an avowed proponent of opening up federally protected waters to expanded drilling, plans to offer the amendment again when the full Appropriations Committee marks up the spending bill Wednesday. The House lawmaker has tried repeatedly in the past to remove the congressional ban on offshore leasing, which is routinely renewed each year as part of the Interior appropriations bill.

"As members of the House Appropriations Committee prepare to vote on a vital piece of energy legislation [Wednesday], we hope they will consider the wishes of the majority of Americans who support offshore domestic energy development," said Jack N. Gerard, president of the American Chemistry Council. "The result of a Rasmussen Reports survey [released Tuesday] found that nearly all voters are concerned about rising energy prices, with 79% very concerned and 16% somewhat concerned. The survey found a majority of voters -- 67% -- believe offshore exploration and development should be allowed. Last week a Gallup survey found 57% of Americans support offshore development in U.S. coastal areas now off-limits to production."

If McCain were to be elected president in November and he moved to lift the presidential restrictions on offshore drilling, producers still would be faced with the congressional moratorium ban on exploration and production -- unless lawmakers vote to remove that too.

In his speech Tuesday McCain directly criticized his Democratic opponent, Sen. Barack Obama of Illinois, for supporting a windfall profit taxes on oil.

"If the plan sounds familiar, it's because that was President Jimmy Carter's big idea, too, and a lot of good it did us," McCain said. Such a tax would cripple domestic exploration he said, adding, "I'm all for recycling, but it's better applied to paper and plastic than to the failed policies of the 1970s."

Obama attacked the Republican senator and said McCain was flip-flopping from previous statements and was capitulating to Big Oil interests.

"John McCain's support of the moratorium on offshore drilling during his first presidential campaign was certainly laudable, but his decision to completely change his position and tell a group of Houston oil executives exactly what they wanted to hear [Tuesday] was the same Washington politics that has prevented us from achieving energy independence for decades," Obama said. "Much like his gas tax gimmick that would leave consumers with pennies in savings, opening our coastlines to offshore drilling would take at least a decade to produce any oil at all, and the effect on gasoline prices would be negligible at best since America only has 3% of the world's oil. It's another example of short-term political posturing from Washington, not the long-term leadership we need to solve our dependence on oil. Instead of giving oil executives another way to boost their record profits, I believe we should put in place a windfall profits tax that will help to ease the burden of higher energy costs on working families, and we should invest in the affordable, renewable sources of energy that Senator McCain has opposed in the past."

In related activity, three House Democrats -- Edward Markey of Massachusetts, chairman of the Select Energy Independence and Global Warming Committee; Rahm Emanuel of Illinois, chairman of the Democratic Caucus; and Maurice D. Hinchey of New York -- said they plan to offer a bill that would assess a fee on land that energy companies have leased but are not using for production. This fee will escalate if leases go unused over the course of several years, with the fees going towards renewable energy and energy efficiency investments, as well as the Low Income Home Energy Assistance Program.

Rep. Nick Rahall II, chairman of the House Natural Resources Committee, also will introduce a bill that employs a "use it or lose it" tactic to compel producers to either produce or give up the federal onshore and offshore leases they are stockpiling by barring the companies from obtaining any more leases until they can demonstrate that they are producing oil and gas from the leases they already hold, or are diligently developing the leases.

Sen. Christopher J. Dodd (D-CT) has introduced similar legislation (S. 3133) in the Senate.

Currently oil companies are not producing oil or natural gas on the nearly 68 million acres of federal land already under their control, the House lawmakers said. Offshore, producers are producing on only about 20% of the acres they hold, while onshore, companies are producing on less than 30% of the acres they hold, they noted. They estimated that these unused areas could produce an additional 4.8 million b/d of oil and 44.7 Bcf/d of natural gas, nearly double current domestic oil production.

"The federal government has made tens of millions of acres available for oil and gas development. It's the energy companies that are refusing to produce and now we will make them pay if they continue to refuse to increase our domestic supply," the lawmakers said.

"It's time for oil companies to use it or lose it," Emanuel said.

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