As the Bush administration and Congress work to restore confidence on Wall Street, the issue of offshore oil and natural gas drilling — a political hot potato for weeks — has been pushed to the back-burner on Capitol Hill, according to legislative sources.

“It doesn’t seem to have the same level of intensity as it did,” said Bill Wicker, spokesman for Sen. Jeff Bingaman, chairman of the Senate Energy and Natural Resources Committee. The banking and financial crisis “has sucked out all of the oxygen” on offshore. “The sense of urgency is kind of gone,” and the Senate is in a “holding pattern” on the matter, he said.

The market liquidity and credit problems “have taken precedence” over offshore drilling, said a Capitol Hill observer. Facing lawmakers before they can adjourn to campaign will be legislation addressing the Wall Street meltdown, possibly a second stimulus bill, a continuing resolution to keep the federal government operating past Sept. 30 (which may or may not include a drilling moratorium), and a $17 billion package to extend tax credits for renewable fuels and efficiency. It’s unclear whether offshore drilling will be squeezed in.

The bipartisan group of 10 Republican and 10 Democratic senators, now known as the “Gang of 20,” has decided to wait until after the November elections to introduce its legislation, which sources say would allow drilling 25 miles offshore and provide revenue-sharing for coastal states that “opt in” to drilling, Politico.com reported. The bipartisan group believes the political climate is too charged to introduce its bill now. The Senate is scheduled to adjourn Friday (Sept. 26) to campaign, but this could very well be delayed due to the upheaval in the financial markets. Both houses could return for a lame duck session in November.

“The million dollar question” is what, if any, offshore legislation will the Senate take up before it leaves. It’s “very possible” the Senate could vote on the offshore legislation that the House approved Tuesday, Wicker said (see Daily GPI, Sept. 18).

The House energy bill would clear the way for drilling as close as 50 miles off the Atlantic and Pacific coasts if coastal state legislatures approve, as well as raise taxes on oil and gas producers by nearly $18 billion, accelerate leasing in Alaska, establish the first national renewable electricity standard and encourage the development of renewable energy and other alternative fuels.

The House bill could face some problems in the Senate and a potential veto by President Bush, who supports allowing drilling three miles from shore, where the federal waters of the Outer Continental Shelf (OCS) begin.

If Congress fails to vote out an offshore drilling measure by Sept. 30, the 26-year-old congressional moratorium on oil and natural gas drilling in the OCS, which has been a staple in appropriations bills since 1982, may lapse and allow drilling in federal waters as close as three miles from beaches — a prospect that even the states that support offshore drilling don’t want.

“Oct. 1 could be one of the great days in the history of this country,” CQ Today reported House Minority Whip Roy Blunt (R-MO) as saying. Other lawmakers, however, pointed out that the lifting of the moratorium would likely be short-lived if Sen. Barack Obama (D-IL) is elected president in November.

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