Oil prices have finally fallen below the $100 a barrel mark and look to be dropping in the near future as commodity markets worry less about supply of oil than about lessening demand brought about by crumbling financial markets. Even in the face disruption of supplies by Hurricane Ike, oil prices fell over $4 to $96.27 a barrel. In the face Ike, that is a measure of how supremely weak the market is at the moment.
The key word in that last sentence is "moment." As financial markets shake out, the same problems of limited supply and rising world demand will reassert their upward push on oil prices. Not even the Nancy Pelosi - who suspended the House in August without bring up an energy bill for fear of it being hijacked to force a vote on drilling - believes that she can possibly allow the matter to slide any longer.
Thus Pelosi has finally given up the ghost on no drilling for oil - or at least that is the line she is putting out for public consumption. Once promising to "drain the swamp" and conduct the most open and fair Congress in history, Pelosi has turned Congress into her own Politburo, refusing to allow votes that she might lose and shutting out the Republican members from input into laws she crafts. The latest - an energy package written completely by the left and designed to limit drilling through the back door.
To give some background, the only place offshore were oil drilling is allowed is in the the Gulf of Mexico. The states bordering the Gulf have both a say in allowing the driling and an economic incentive to allow it. They keep 1/3 of the royalties on the oil revenue. They collected some $9 billion for their state coffers last year.
With that in mind, Democrats have huddled for the past few weeks trying to figure a way around the conundrum off-shore drilling. The partisan result - the Pelosi Plan. The plan lifts the ban on offshore drilling with one hand but with the other gives states a right to veto drilling within 100 miles of their coastline and insures that they will do so by taking away the royalty sharing agreement. A state would be hard pressed to allow exploitation of natural resources until they have a deal to actually get paid for those resources.
Pelosi's disingenuous reason for killing the royalty sharing agreement is ostensibly because it would require a reworking of the budget because of "pay as you go rules." As applied to off-shore drilling, "Congressional Budget Office forecasts now include revenue from drilling going to the treasury. If money is diverted to states, it would have to be offset with tax hikes or spending cuts under “pay-go” rules." Siting that as an obstacle is an obvious canard. One, these rules are easilly waved - they just were for the Fannie Mae / Freddie Mac. Two, the House has yet to submit any budgets for the next fiscal year. Three, the amount the CBO has budgeted in its projections for off-shore royalties is less than $1 billion a year over the next ten years. That would not require anything like the significant budget reworking that Pelosi is claiming. This is just another partisan hack job from the Queen of the Swamp.
(H/T Hot Air)