Libyan turmoil, $100 per barrel oil fuel Republican drilling push on Capitol Hill

The Libyan uprising and triple-digit oil prices are reinvigorating GOP-led attacks on White House offshore drilling policies — a collision that will burst into public view next week on Capitol Hill.

Republicans will press Interior Secretary Ken Salazar on offshore drilling restrictions when he appears before two committees to defend the Interior Department’s fiscal year 2012 budget plan.

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It will be Salazar’s first Capitol Hill appearance since uprisings in North Africa and the Middle East began, sending oil prices to their highest levels in more than two years.

With gas prices rising, Republicans have seized on the crises to ramp up calls for the Obama administration to begin issuing the first deepwater drilling permits since last year’s BP spill, and to speed up shallow-water permitting.

A top Interior Department official said Friday that the agency is “quite close” to resuming issuance of deepwater permits, but it’s unlikely the agency will act aggressively enough on drilling to defuse GOP attacks.

Rep. Doc Hastings (R-Wash.) — chairman of the House Natural Resources Committee that will host Salazar Thursday — has scheduled several hearings on offshore drilling in coming weeks. A spokesman told The Hill earlier this week that the Libyan turmoil “will be a strong backdrop” to the sessions.

More broadly, Republicans and pro-drilling Democrats are citing the unrest to revive calls for new or wider drilling. Sen. Lisa Murkowksi (R-Alaska) on Thursday cited the Middle East and North Africa turmoil in a speech in which she vowed to “throw some elbows” to win the oil industry wider access to federal lands and waters in Alaska.

She is the top Republican on the Energy and Natural Resources Committee, which will hear from Salazar on Wednesday.

Obama administration officials say they are working toward a resumption of deepwater permitting.

Salazar and his top deputies were in Houston on Friday reviewing enhanced systems the oil industry has developed to rapidly contain runaway undersea wells, a capacity that Interior is making a prerequisite to granting new permits.

But Salazar — who is forcing drillers to show compliance with beefed-up safety rules — appeared to strike a defiant tone Friday amid the immense political pressure on the agency.

Reuters reported that Salazar “told reporters the situation in Libya was 'not changing at all what we do' and the government felt no pressure to hurry its permitting process.” But Michael Bromwich, the agency’s top drilling regulator, told reporters that he’s “quite confident that we’re getting very close to the point where we can begin issuing deep-water permits,” according to press accounts.

Libya is the 17th largest oil-producing country in the world, and the supply disruptions sparked by turmoil there helped send oil surging past $100 per barrel this week.

Officials rushed to reassure the market as prices rose. President Obama stressed that the U.S. economy would be able to “ride out” price spikes and top officials with the International Energy Agency said the organization would release oil stockpiles if necessary.

Oil prices settled Friday at below $98 per barrel amid reports that Saudi Arabia is boosting output to help offset Libyan production that has been severely disrupted. Oil traded as high as $103 Thursday. 

The volatility of the Middle East supply was also demonstrated Saturday when gummen attacked Iraq's largest oil refinery, killing a guard and detonating bombs that sparked a fire and caused the refinery, which produces 150,000 barrels per day, to shut down. The attack came after the "Day of Rage" anti-government protests.

Democrats and green groups, meanwhile, are pushing back against the calls to speed up drilling. Rep. Ed Markey (D-Mass.), the top Democrat on the Natural Resources Committee, circulated a memo to reporters Friday afternoon aimed at debunking GOP “myths” about drilling.

“Global unrest shows that oil is still a global commodity, with supplies still concentrated in the Middle East. Increased drilling in the United States would do nothing to immediately impact prices,” his office states.

The Energy Information Administration, the statistical arm of the Energy Department, estimates that opening up large swaths of the country’s waters to drilling will only lower gas prices by only a few cents.

One expert said the new oil shocks will test whether the divided Congress can find common ground on energy.

“The Middle East unrest portends long-term uncertainty for much of the world’s oil supply,” said Paul Bledsoe, a senior adviser to the Bipartisan Policy Center, a think tank that works on energy policy.

“The real question is, can the chronic threat of supply disruptions galvanize bipartisan approaches to improving oil security, as happened in 2007,” he added, pointing to a 2007 energy law approved by a Democratic Congress and signed by President George W. Bush, a measure that included increases in fuel mileage standards and an expansion of the national biofuels mandate.

“Chronic anxiety about Middle Eastern oil supplies may turn out to be a test of whether this divided Congress can act in a bipartisan way on anything,” Bledsoe said.

He sees potential for a deal on energy legislation that blends priorities of both parties, such as expanded domestic production alongside provisions expanding deployment of electric vehicles and boosting green energy R&D.