White House bombshell: Cap-and-trade for drilling offshore … California!

Buried inside The New Yorker‘s profile of Peter Orszag, Obama’s budget director, is this stunning paragraph:

Obama’s White House is filled with former members of Congress and congressional staffers. They are legislative strategists and dealmakers, and these days they often use the phrase “grand bargain” when asked how they expect to achieve their ambitious agenda. The senior White House official told me that they were exploring an energy deal that would include a “serious” and “short-term” increase in domestic production””perhaps opening up for oil exploration places like the waters off the coast of California“”that would appease the “Drill, baby, drill” crowd, while also adopting a cap-and-trade plan that could take effect one or two (or more) years after 2012, which is when Obama’s current plan would start. “You need to have something like T. Boone Pickens and Al Gore holding hands on a broad compromise,” the official said. Such a plan wouldn’t look much like the one in Obama’s budget proposal””more like a third cousin than like a sibling, let alone a twin””but, unlike his current plan, it could get through Congress.

Wow!  Hard to know where to start a response.

First, this “Senior White House official” doesn’t strike me as somebody who knows bloody much about energy or climate or the environment.

After all, I don’t think that a “grand bargain” mandating that the waters off of coastal California be opened to drilling would get more votes for comprehensive energy and climate legislation.  It would certainly lose votes in the California delegation.  Pickens is already on board with a strong renewable energy push, and while he supports offshore drilling, he knows that can’t come close to solving our oil addiction.  In any case, Pickens can’t even bring anybody on his side of the aisle to support renewables, which he believes in, so I can’t imagine how he could bring in any conservative support on climate legislation, which he doesn’t believe in (see Pickens: “You don’t want to turn it over to the greenies, or what’ll happen is they’ll want to shut down every coal plant”).

Second, there is nothing on the production side you can possibly dangle in front of the “Drill, baby, drill” crowd (aka conservatives) side that would get them to vote for a cap.  Why?  They simply can’t abide carbon regulations and think that attacking higher energy prices is a winning issue for them.  And I’m quite certain they believe they can get all the drilling they want as soon as oil prices go back up.

Third, given conservative intransigence on climate, the only people who matter are moderate Democrats.  They might well be interested in a grand bargain that includes some more energy exploration, but I seriously doubt they will demand drilling off the coast of California as the price for their vote — it just doesn’t have any obvious direct benefits to most of their constituents.  Now, I do think it is good politics for Obama to concede some expanded domestic exploration.  Once oil goes back above hundred $150 a barrel, which seems rather likely in Obama’s first term, that will be all but inevitable anyway.  But I’m not certain the time is right for this concession since, again, I’m not certain what he can get in return for it now .

Fourth, nothing Obama might plausibly do today can increase domestic production a “serious” amount in the “short-term.”  Exploration in the past couple of years has mainly been constrained by the shortage of drill rigs and people and now by the temporarily low price of oil.  At the end of 2006, the Republican Congress and the president enacted “The Gulf of Mexico Energy Security Act,” which opened 8.3 million acres of the Outer Continental shelf for drilling — oil prices then doubled within 2 years (see “Offshore drilling raises oil prices*“).  And as first reported on Climate Progress in 2008:

A report last year by the Energy Department’s Energy Information Administration said that “access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030. Leasing would begin no sooner than 2012, and production would not be expected to start before 2017.” It added, “Because oil prices are determined on the international market, however, any impact on average wellhead prices is expected to be insignificant.”

Finally, I expect something that looks a lot like Obama’s energy and climate plan to pass both houses.   I always expected it to be enacted into law into 2010 and kick in around 2013 at the earliest, so that isn’t a particularly shocking prediction. The New Yorker‘s Ryan Lizza may assert that his Obama’s current plan can’t get through Congress, but that isn’t reporting, it is just speculation.

President Obama certainly thinks that he can get something close to Waxman-Markey passed, as he is apparently now starting to throw his political muscle behind it.  Let me end with an extended excerpt from today’s Greenwire (subs. req’d) story, “Risks, rewards abound as Obama enters House debate”:

President Obama puts his political chips on the line tomorrow when he meets with House Democrats wrestling with legislation to overhaul U.S. energy and global warming policy.

The bill is stuck in subcommittee because of concerns from about a dozen Democrats with strong ties to the coal and gas-and-oil industries, and many predict a push from the popular new president may shove the measure along in the legislative process.

“Having an expression of interest on this from the White House is extremely useful in convincing members of the president’s own party to try and reach an accord,” said Joe Stanko, an industry attorney and former House Republican aide on the Energy and Commerce Committee.

But Obama faces some danger in wading so soon into the climate policy battle on Capitol Hill. A loss in the House Energy and Environment Subcommittee could hamper the long-term prospects for one of the president’s signature agenda items. And it also would carry broader repercussions as diplomats around the world look to the new administration for leadership as international negotiations reach a climax this December in Copenhagen.

To date, Obama has dealt in broad terms on climate, weaving the issue into his inaugural address, nationally televised press conferences and speeches to Congress. Tomorrow’s meeting with House Democrats marks the first time he will be face to face with the committee members haggling over the sticky details of climate legislation.

An environmentalist tracking the climate debate expects Obama will do his best to persuade Democrats that he is behind them in midterm elections as they move forward on the legislation.

“Let them know they won’t be hanging in the next election,” the environmentalist said. “Let them know it’s a presidential priority. And if they help him, he’ll help them out elsewhere, even if it’s not on this bill.”

Obama’s timing could be ideal. While the 36-member subcommittee may seem like an early stage in the process for the president to be stepping in, Obama could get the biggest bang for his lobbying buck by pushing now. After all, the panel’s political dynamics are seen as friendly to industry.

“There’s no doubt that because of the way the ideology of the subcommittee is set up, passing the subcommittee would be a momentum-producing event,” Stanko said.

It also appears Senate Democratic leaders see the House debate in the same way.

“The House is a laboratory for us because they have the ability to move things more quickly than we do,” Senate Majority Leader Harry Reid (D-Nev.) said Friday during an event hosted by National Journal Group. “And this laboratory is now in operation.”

And another factor in Obama’s move may be politics — with the president riding high in the polls ever since his election last November.

“Right now, he’s got enough in the bank that he can continue to make withdrawals,” said Dana Perino, former White House spokeswoman for President George W. Bush.

Obama officials have been busy behind the scenes laying the groundwork for tomorrow’s White House meeting.

The president’s top political and energy advisers, David Axelrod and Carol Browner, came to Capitol Hill last week to meet with key House and Senate committee members and staff who are working on the bill.

Senators in attendance said their closed-door meeting was about messaging — how to connect the energy and climate plan to national security and economic recovery.

“The discussion was … related to making the connection that good global warming policy is good economic policy,” said Sen. Bernie Sanders (I-Vt.), who attended the meeting.

This personal lobbying is certainly important.  That said, I do agree with those who say that this isn’t the time for the big messaging push:

Jeremy Mayer, a political science professor at George Mason University, said Obama would be smart to hold his fire when it comes to hardcore lobbying for the bill. The subcommittee debate, he said, is not as crucial as future votes in the House and Senate when the details are even more finely tuned.

“When you roll out major legislative agenda items like energy policy, timing is crucial,” Mayer said. “It’s not a time for public strategy. You’d waste your effort. You only have so many bullets in the gun of appealing to the public.”

Mayer said the White House meeting tomorrow and the outreach from top Obama brass do not equate to the lobbying blitz that will be necessary.

“If Obama is as popular in three months as he is today, this legislation will have a much better chance of passage,” Mayer said. “If he calls [moderate House Democrats] into his office then, they’ll be afraid of opposing him. There’s no point in going public on this now.”

This is going to be an extended process — House committee, full House, Senate committe, full Senate, conference committee, full House and Senate one more time.  At each point in time the right mixture of lobbying and messaging is needed.  Right now, we mainly need to get some bill out of House committee.  Some deals will no doubt be cut, but they certainly won’t involve offshore drilling in California.  Let’s see what Obama’s personal touch can do before pursuing any supposed “grand bargain.”