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Senators Introduce Bill to Increase Domestic Oil and Natural Gas Production; Coal-Derived Fuel Mandate

US Senator Pete Domenici (R-NM), ranking member of the Senate Energy and Natural Resources Committee, introduced the American Energy Production Act of 2008 (S.2958) to increase domestic production of oil and natural gas and to fund the development of oil shale and coal-to-liquids technology. Eighteen other senators co-sponsored. Included in the bill is language for a coal-derived fuels mandate.

The bill would open up the Arctic National Wildlife Refuge (ANWR) as well as the Atlantic and Pacific regions of the Outer Continental Shelf for exploration and production; and lift the one-year moratorium on developing oil shale in Colorado, Wyoming and Utah.

Specific provisions of the bill include:

  • Outer Continental Shelf. The bill allows petitions for leasing activities in the Atlantic and Pacific regions of the Outer Continental Shelf. The bill allows the Governors of coastal states to submit a petition for a lifting of the moratorium within their state boundaries. The bill creates a revenue sharing agreement for participating states in which 37.5% of revenues will go to new producing states, 12.5% to the Land and Water Conservation Fund, and 50% to the Federal Treasury.

  • ANWR. The bill establishes a competitive oil and gas leasing program for the Arctic National Wildlife Refuge Coastal Plain under the Mineral Leasing Act. It provides for a 50/50 share of ANWR revenues between the Federal Government and the State of Alaska. Directs that $35 million of the State share be deposited annually into a “Coastal Plain Local Government Impact Aid Assistance Fund” for Alaska communities.

  • Permitting. Repeals the $4,000 fee for new applications for permits to drill that was established in last year’s Omnibus Appropriations Bill.

  • Refineries. Grants the EPA authority to accept consolidated applications for permits required to construct and operate refineries, and authorizes financial assistance to states and Indian tribes for the hiring of personnel to process permits. Establishes a 360-day deadline for the approval or disapproval of consolidated permit applications for new refineries and a 120-day deadline for applications to expand existing refineries.

  • Strategic Petroleum Reserve. Suspends filling the Strategic Petroleum Reserve for 180 days.

  • Renewable Fuel and Advanced Energy Technology. Amends the Energy Independence and Security Act of 2007 to strike the definition of renewable biomass and replace it with the Senate-passed definition.

  • Establishes a program of direct loans and grants to accelerate the production of advanced batteries in the United States.

  • Establishes a research program to determine infrastructure needs for the transport of renewable fuel blends, and directs the Secretary of Energy to consider the compatibility of existing infrastructure with intermediate blends of renewable and petroleum based fuels.

  • Studies the environmental and efficiency attributes of diesel-fueled vehicles.

  • Coal-Derived Fuels. Mandates that 6 billion gallons of coal-derived fuels be produced by 2022, starting at 750 million gallons in 2015 and ramping up by that same amount annually. Requires that CTL fuels produced result in lifecycle greenhouse gas emissions not greater than those associated with gasoline and provides waiver authority based on economic or environmental harm.

  • Oil shale. Repeals the one year moratorium on funds to complete final regulations for the commercial leasing of oil shale established in last year’s Omnibus.

  • Increases the current allowable contract duration of five years to 25 years for procurement of synthetic fuels by the Department of Defense.

  • Repeals Section 526 of the Energy Independence and Security Act of 2007, which prohibits federal agencies from procuring alternative fuels with lifecycle greenhouse gas emissions greater than those associated with conventional fuels that they replace.

Domenici and thirteen other Senators have asked the US Energy Information Administration (EIA) to analyze the impact the legislation will have on America’s reliance on foreign oil and energy prices as compared to forecasts the agency made in its Annual Energy Outlook 2008.

The EIA has assessed the impact of drilling in ANWR before. In March of 2004, the Energy Information Administration, at the request of Representative Richard W. Pombo, then Chairman of the US House Committee on Resources, published a report using government figures and analyzing the projected effect of drilling in ANWR. The report lays out three scenarios: one for low-oil resources, one the mean case, the other for high oil resources.

Some of the report’s findings:

  • The mean-case estimate is that there are 10.4 billion technically recoverable barrels of oil in ANWR, divided into many discrete fields. This estimate includes oil resources in Native lands and State waters out to a 3-mile boundary within the coastal plain area. The mean estimated size of oil resources in the Federal portion of the ANWR coastal plain is 7.7 billion barrels.

  • It will take approximately 10 years to bring the first field on-line (comparable to other Arctic drilling).

  • Assuming sequential development of the fields, rank ordered by size, ANWR production would peak, in the mean case scenario, in 2024 at 870,000 barrels of oil per day.

  • Assuming that every barrel of ANWR oil is consumed domestically, it would reduce imports on a barrel-for-barrel basis.

Co-sponsors of S.2958 include Senators Allard (R-CO); Barrasso (R-WY); Bennett (R-UT); Bond (R-MO); Bunning (R-KY); Chambliss (R-GA); Cornyn (R-TX); Enzi (R-WY); Hutchinson (R-TX); Inhofe (R-OK); Isakson (R-GA); McConnell (R-KY); Murkowski (R-AK); Sessions (R-AL); Stevens (R-AK); Thune (R-SD); Voinovich (R-OH); and Wicker (R-MS).


  • American Energy Production Act of 2008 (S.2958)



I wish we could get it out of the ground quicker, by 2024 no-one will want to buy oil..


Nice... This bill has every appearance to have been entirely written by oil & coal lobbyists who paid to have these senators lend their name to it.



Note that all of the sponsoring senators are Republicans. They've been playing a waiting game, figuring when gas prices get high enough the public will support opening up ANWR. The Democrats will probably block the bill, but with gas at $4/gal that may cost them politically.

I'd rather they work out a compromise. How about increasing CAFE to 50 MPG by 2030 along with the increased drilling, and implement a flexible gas tax beginning in 2010 that would prevent a large decrease in gas prices?

Harvey D


If your assumption is correct, there would be a fearful similarity with the late Roman Empire Senators of the third and fourth centuries AD.

Is history repeating itself?

Have no fear. USA's Senators are democratically elected and can be replaced by 'we, the people'.

Harvey D


What would happen if 100+ million existing recent front wheel vehicles were converted to 4WD PHEV with MIRA modular kits? With a 60% to 64% reduction if fuel consumption, a lot less oil would be required.


Harvey D.,

Personally, I'm not interested in converting anything. I want a factory-made car with a factory warranty, like my Prius. And I believe that's the mainstream view.

But to the extent we increase mileage via new cars or conversions we humans will just drive more miles. Only by increasing fuel taxes, like Europe and Japan, can we increase fuel costs without increasing incentives to find and produce more oil.

Harvey D


One would not have to stop the other. The transition could go much quicker if we do both.

People with a good 3 or 4 year old car may find it cheaper to convert it than buying a new PHEV.

At least, the retrofitting of existing ICE into 4WD PHEVs would be done locally. The thousands laid off by the Big-3 could find new jobs for the next 10+ years.


what would happen if we had a bunch of conversions suddenly or even in the next 10 years?.. oil prices would collapse to unsustainable levels.. another catastrophe for the industry like in the late 80s. The only people that would make money selling oil would be the Arabs and Iraq, they can produce oil at about $2.50 a barrel.

Battery tech will advance so quickly that this will eventually happen, long 300 mile range, quick 10 minute recharges and no maintenance.. who would want to buy an ICE car?.. a lot of garages and mechanics will not survive either


This bill will go nowhere.

Even when the Dems were the minority they were able to block drilling for oil in the Arctic National Wildlife Refuge. The Dems have the majority now, and are poised to expand that majority. How many Democratic Senators are vulnerable now? According to polls, only Landreiu (D-LA) who would vote to drill anyway. How many Republicans are up for election and vulnerable in places where environmentalism is more popular? Gordon Smith (R-OR), Susan Collins (R-ME), Coleman (R-MN). All three have shown the "ability" to cross the aisle and join Democrats on sensitive issues, and I could imagine this would be one of them.

So, if you throw in HI Dems who vote in unison with AK's Senators "+2 rights!", it will come very close to a 50-50 vote. But, there won't be a vote -- the Dems would require the Republicans get 60 votes to even get it on the floor, and it ain't happening.

As for Pete Domenici (R-NM), the sponsor of the bill, he's retiring with the 2008 term and the Democratic challenger Tom Udall is heavily favored to win that Senate seat.

To recap:

1. This bill will go nowhere.
2. This bill will not endanger Democratic Senators in 2008, and the public will have forgotten by 2010.
3. The bill's sponsor is a Senatorial lame duck.


A rear-wheel retrofit for a FWD car doesn't eliminate the need for the engine to run to provide power steering and brakes, or cut the slippage losses in the torque converter.  If you get into things like electric accessory drives and replacing the TC with an alternator (to recover the slippage power), you're talking some serious labor costs.

We only have so much money to spend, and these fixes will always be cheapest when they come from the factory.  Our goal should be to push that as fast as possible; vehicles cover half their lifetime mileage in their first 6 years, so a 60% reduction in demand from the new fleet would cut aggregate demand by a whopping 5%/year.

Harvey D


The same happened when horses and buggies were replaced with automobiles; when stenos and typewritters were replaced by computers; when horses and mules were replaced by tractors, etc.

The world adapted and did not collapsed.

You can rest assured that the world will quickly adapt to clean electrified vehicles. It may provoke the arrival of a new economy, (with less GHG and diseases), based on clean electricity instead of oil. The first countries to adapt may benefit the most.

Harvey D


What would be the total impact if you introduce 10 million new (100 mpg) PHEVs + 10 million coverted (60 mpg) ICE/4WD PHEVs a year for the next 10 years?

You would effectively replace 20 million (20 mpg) ICE with 20 Milion (80 mpg) PHEVs every year.

I bet you could stop or curtail corn/grain ethanol production within a few years and reduce oil imports significantly within 10 years.


Domenici has turned into the heart of darkness in recent years. Look at all the usual suspects that signed with him. Sure we are going to need production and we will make deals when they are coupled to consumption goals. Let's see how much we can save first. If it looks like we are not hitting targets, they we will talk. The biofuels has them upset. They want things to remain oil and only oil for as long as they can. Exxon said that they were not investing in biofuels because they would not have a significant impact. Well, if you don't invest in them, then I guess they will not have a significant impact. We will see.



This is the optmistic view of the problem: stone age ended before shortage of stone, wood age stoped before the shortage of wood (not totally tru by the way), coal age ended before shortage of coal, well here stop the analogy. The coal consumption stopped to decrease in the late 80s abd have steadily increased these 20 past years. The problem to day is that we need oil, hydro, coal, natural gaz, nuclear to run our energy hungry 6 billions people industrial crazy moden world. The shortage of oil will by domino effect put a pressure on coal supply then to natural gaz and uranium resource.

US swallow 20 millions barrel of oil every single day and the alternative that can scale to offset is not yet identified, don't bet me wrong I am a fan of PHEV, it is formidable technical challenge but I least a see a hope (contrary to hydrogen where I see no hope) that it can scale significantly over, let say, the next 30 years to offset some of our oil addiction (means ~ 20-30% of the fleeet as PHEV). But in the same time we should be careful not to rely to much on the "miracle of the technology" to maintain the "happy motoring" that we are enjoying right now. Even in the most optimistic view we will have to reduce our reliance on cars, the technology will no fill the gap if we face tomorrow a continuous decrease in oil production due to peaking. Sure battery will progress and their cost will drop, but very slowly, batteries have a long history of unkept promises despite decades of R&D and potential of huge market. Look at solar cell are slow the progresses are despite all the hype about it, double digit growth in sales but still not even 1% of electricity produced this way, and more than 10 000K$ to install one Kwh of pannel on your roof. I don't think the progress on bateries will be much faster than what we see on the solar today.

Harvey D


I appreciate your comments but I'm much more of an optimist.

The oil squease + GHG + increasing oil price will provoke more investments in improved batteries mass production. Batteries price will drop rapidly, PHEVs and BEVs will become affordable and common place within a few years.

Low cost solar may not be for tomorrow. However, wind power and nuclear power could supply all the extra energy for future PHEVs and BEVs.

Meanwhile, we should not give up on solar power. It is by far the cleanest most abundant energy source. We will soon learn how to better convert it to electricity for future generations.


Just look at the replacement figures and you will see the problem. For every barrel they pump out, the should discover reserves to replace that barrel. They have fallen behind in that for years. Some oil companies will not even post projections any more. If you are not finding replacement reserves and the world is using more every day, the math gets pretty clear.


Even if this bill passed, somehow, we simply do not have the reserves to have energy independence over the longer term. I'm convinced more and more that PHEVs and BEVs are the way to go. To that end, we need cheap, high-density batteries that recharge in reasonable length of time. A123 is moving in that direction. But we must go faster.


One of the statements they made about the 70s and 80s when we made fuel economy gains and before the Saudis flooded the market is, conservation got there first. We doubled the mileage of cars and the world oil price went down. It was both efficiency and the Saudis, but it shows efficiency works.

Harvey D

Progressive but agressive electrification of the world's personnal, commercial and industrial vehicles may be the best sustainable way to go.

The transition has barely started. It could take as long as 5 decades if market forces do it (alone) but we could reduce the transistion to 3 decades with more direct and indirect government involvement.

Had USA and Canada invested, half the $20 billion a year they have given to Oil Cos, for battery development and automated production, we would be producing at least 10 million affordable battery packs a year by now.

Priorities have to be changed. At $120/barrel, Oil Cos do not need government handouts. They should pay back some of the $ billions they got during the last 10 years thru special higher taxes on their huge profits.



I agree with removing the tax breaks they got in the late 90s when oil prices dipped near $15/barrel. However, a "windfall" profits tax is precisely the wrong thing to do. It's a disincentive for domestic oil production. It raises their production costs at a time when oil exploration is becoming more and more expensive. A barrel that cost $10 to produce just six years ago now costs $16 to produce.

If this really is peak oil, it isn't a windfall at all. The market price of oil will naturally rise as supplies shrink.


If you want to encourage domestic production perhaps an oil import fee is better. We want to import less oil and one of the classic ways to discourage something is to tax it. An oil import fee would be a tariff and if it were on automobiles it might cause a trade war, but what kind of trade war would an oil import fee cause? The Saudi decide to buy few U.S. products?

More than 5 years ago, the oil companies started to sell off their refineries because they said it was not the profitable part of the business. Another way of looking at it is that they knew the price of oil was going up and they were going to concentrate on production and leave the thin margin parts to someone else.

An oil import fee might anger the Saudis and I do not think politicians want that. The Saudis have been the voice of moderation in OPEC so far, but this could change. OPEC has said that if we start to use the petroleum reserve as a market price control they would retaliate. This is the kind of predicament that we are in today.

The dollar used to be worth one Euro, if the value of the dollar had not fallen to $1.50 per Euro a barrel of oil might cost $60 dollars today. Since we run such large budget and trade deficits we have this problem. The main reason the dollar is starting to rebound just a bit is the world is slowing just a bit too. It is a relative situation.


The problem you didnt see is the end of oil is the end of cratopia.

Money in the form of taxes and fees and all that. Oil pays for entire state governments... for the entire road system doe wntire school systems and in various ways its everywhere in a vast sea of revenues.

Bev cant replace that. And its so big the impact will shrink gov and everything it does by a massive amount.

Abd the crats are worried... very worried.

This isnt the storm this is just a cloudy day the real storm hits when peak oil turns to the downslope and the rise in gas and oil prices no longer makes up for the drop in production... and the all mighty oil teet runs dry and every state and every city goes deep into the red.



A strong currency is a blessing and a curse. It makes imports cheaper, but makes our labor comparatively more expensive. This puts more and more factories off shore. The only way to correct a trade deficit is for the value of our currency to fall far enough that manufacturing becomes cheap enough here that the offshoring trend starts to reverse itself. That's starting to happen--look at our export/import numbers again. Our trade deficit actually fell about 5.7% in 2007.

China didn't help by pegging their currency at a fixed level until 2005, when they finally relented under international pressure to let it float. It's starting to appreciate fast enough now that opening new factories in China is much more expensive than it used to be.


Where do I sign to oppose this bill?

Sick Of It

I've grown tired of the Republicans protecting big oil - Louisiana Democrats do it too though. I like a strong military, limited government, judges that don't legislate from the bench, & a judeo-christian political orientation, so I can't vote for democrats either. However, we have got to rid ourselves of this menacing addiction to oil.....more drilling is not the answer you idiots!! I hope the democrats filibuster & block the hell out this pathetic legislation.

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