By Alexander Bolton - 04/01/10 05:47 PM EDT
President Barack Obama is trying to neutralize the oil industry to
advance energy reform, according to Democrats who see him taking a page
from his healthcare playbook.
But his decision to support offshore drilling could come at a cost. Liberals are concerned he might jettison their chief goal — limits on carbon emissions — in the final hours to pass the legislation, similar to the way the public option was sacrificed to pass healthcare reform
“In some ways it’s similar to the approach used on healthcare,” said Chris Lehane, a Democratic political strategist. “At the beginning, the administration brought in the pharmaceutical, insurance and healthcare companies and reached an accommodation with those industries. It gave them the opportunity to move legislation on the Hill.”
Darrell West, director of Governance Studies at the Brookings Institution, also drew a parallel between healthcare and energy reform.
“What Obama did on healthcare was try to buy off some of the key industries, and he seems to be doing the same in the energy area,” West said. “If he can lower the opposition of oil companies to energy policy, it really raises the odds of legislative success.”
The new strategy is reminiscent enough of healthcare reform to disconcert some Democratic lawmakers who fear that a cap on carbon emissions could become energy reform’s version of the public option.
Some liberal Democrats worry a restraint on carbon emissions could become a Holy Grail used to drum up the party base only to be jettisoned at the final hour to win the support of centrists.
Interior Secretary Ken Salazar stoked those fears on Wednesday when he announced during a television interview that “the term ‘cap and trade’ is not in the lexicon anymore.”
Some House Democrats fear meaningful restraints on carbon emissions, which scientists believe to be the driving force behind global warming, could drop out of legislation, just as a government-run insurance program was sacrificed in the final push to pass healthcare reform.
“Having a legally binding restraint on carbon is not the public option of energy; it’s the universal coverage of energy,” said Rep. Jay Inslee (D-Wash.), a member of Speaker Nancy Pelosi’s (D-Calif.) select commit on global warming.
“If the carbon restraint is jettisoned, we’re not going to have a bill,” Inslee said.
Democrats made similar threats when Obama’s support for the public option wavered, but the legislation ultimately passed without it.
Inslee said he is willing to keep an open mind on Obama’s offshore drilling plan if it is included as part of comprehensive energy legislation that includes a cap on carbon emissions.
Inslee, founder of the House Sustainable Energy and Environment Coalition, said a carbon emissions restraint is essential to driving private investment in green-energy technology.
“I spent a lot of time talking to the venture capital community and they say, ‘Give us a restraint on carbon and we’ll give you billions of dollars for investment in the green-collar job industry.’ ”
Inslee said an Obama administration official assured him that Salazar’s comments were misinterpreted and that a carbon cap is still under consideration.
Spokesmen for the administration did not respond to a request for comment.
The Obama administration cut deals with the pharmaceutical and hospital industries early in the healthcare talks to head off opposition.
To woo pharmaceutical companies, Obama agreed not to allow the re-importation of prescription drugs or to empower the federal government to negotiate drug prices for Medicare beneficiaries. In exchange, companies promised to give seniors discounts on brand-name drugs.
The administration also agreed to exempt hospitals from the cost-cutting decisions of an independent Medicare advisory board.
Legislative strategists calculated that millions of dollars in negative TV ads and grassroots advocacy from those powerful interests could have killed the bill.
Obama on Wednesday announced he would open 167 million acres off the Atlantic coast to oil and gas drilling, benefiting companies such as BP, Exxon Mobile and Royal Dutch Shell.
Corporations have become even more powerful since a recent Supreme Court decision striking down restrictions on corporate political spending.
Obama’s decision to open up the Atlantic drilling fields, from Delaware to Florida, does not appear motivated by a concern that gas prices will become a significant political issue before the midterm elections.
Sander Cohan, a principal at ESAI–Energy, Security, Analysis Inc., a market research firm, predicted gas prices would increase by about 40 cents to 45 cents between now and the summer peak.
“It’s going to look at lot more like 2009 where you saw a mild spike,” said Cohan.
Gas prices became a significant issue in 2008, when they soared to more than $4 a gallon because of a shortage in refining capacity. That summer Sarah Palin, the GOP vice presidential nominee, made “Drill, baby, drill,” a mantra of the political season.
But energy analysts say there is plenty of unused refining capacity and a glut of oil on the market, which means gas prices are unlikely to give Republicans much political traction this summer.