Drilled

They're still fighting this bailout, but Democrats have given up on trying to reinstate the offshore drilling moratorium.

Democrats have decided to allow a quarter-century ban on drilling for oil off the Atlantic and Pacific coasts to expire next week, conceding defeat in a months-long battle with the White House and Republicans set off by $4 a gallon gasoline prices this summer.

House Appropriations Committee Chairman David Obey, D-Wis., told reporters Tuesday that a provision continuing the moratorium will be dropped this year from a stopgap spending bill to keep the government running after Congress recesses for the election.

Republicans have made lifting the ban a key campaign issue after gasoline prices spiked this summer and public opinion turned in favor of more drilling. President Bush lifted an executive ban on offshore drilling in July.

"If true, this capitulation by Democrats following months of Republican pressure is a big victory for Americans struggling with record gasoline prices," said House GOP leader John Boehner of Ohio.

This was inevitable given how the moratorium had to be renewed every year. It would have required a 2/3 vote to overcome a Presidential veto and the votes for that weren't there. It's still annoying, especially because prices have gone down dramatically from the peak, and because of conservation, not drilling. Also, Democrats tried to make the argument and then dropped it. Makes no sense.

There's still a chance to fix this, however. It'll take years to put drills in the ground, so the next President will play a role. Plus, the coastal states could still deny leases, and I'm certain that's what will happen in California.

UPDATE: This is kind of interesting:

Chesapeake Energy Corporation (NYSE: CHK) announced plans to reduce its drilling capital expenditure (capex) budget during the second half of 2008 through year-end 2010 by approximately $3.2 billion, or 17%, in response to an approximate 50% decrease in natural gas prices since June 30, 2008 and concerns about the possibility of an emerging U.S. natural gas surplus in advance of increased demand from the U.S. transportation sector. Of the $3.2 billion drilling capex reduction, $0.8 billion is attributable to the drilling capex carry associated with the company's recently closed Fayetteville Shale joint venture with BP America (NYSE: BP), $0.5 billion is attributable to the drilling capex carry anticipated in a Marcellus Shale joint venture and $1.9 billion is attributable to reduced drilling activity. The company plans to reduce its current operated drilling rig count of 157 rigs to approximately 140 rigs by year-end 2008 and expects to keep its rig count relatively flat through 2009 and 2010.

So Republicans may want to drill now, but the corporations don't think it's profitable enough. There also isn't enough equipment to do the drilling. This was all about getting oil contracts that companies could use to prove to stockholders that they have the reserves. Nobody wants to drill anything.