Democrats, Republicans and Oil Producers Play the Blame Game on Energy Prices

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With oil and gasoline prices high and constantly threatening to go higher, the blame game is in full swing.

Several Democratic senators pointed to a new reason Wednesday -- they're blaming the oil companies, accusing them of just sitting on federal leases and making no effort to produce oil and gas from them.

"There are a total of 38 million acres under lease but the industry is only producing 6.5 million,” Sen. Robert Menendez, D-N.J., said. “So you have 60 million acres that are unused that are already leased to companies across the country. That means that less than 25 percent of acres leased on federal lands and water are actually producing. The bill we are here to discuss would require that oil companies holding oil and gas leases developed those leases in diligent manor."

Sen. Chuck Schumer, D-N.Y., joined the criticism.

"Just as misbehaving children are sometimes going to hoard toys they are not playing with, companies are sitting on land they aren't using. It's time to act like adults. Oil companies should use what they have or allow others to do so."

So the Democrats want to pass a law that would require oil companies to use their leases or forfeit them.

"That is an old, tired, recycled argument that we keep hearing again and again. These are political antics at their best meant to distract the American public from rising gas prices and the fact that we're not back to work in the Gulf, said Erik Milito of API, the American Petroleum Institute.

And he noted,"We have to use it or lose it, that's the law right now. You get a contract from the government. If you don't produce oil or natural gas on it, at the end of the term, you give it back."

But Milito argues that the administration makes the difficult and expensive undertaking of oil exploration even more so.

"It's hard to develop leases when the government isn't giving us the permits to develop those leases," he said, offering examples.

"We have a lot of leases now that are producing out there, deepwater, that were issued from 1996 to 2000. Our industry bought over 3000 leases during that timeframe, paid over $4 billion for those leases, invested close to $38 billion in those leases to develop them, significant investments that show aggressive development of those leases."

But not all of them have economically-recoverable oil or gas. And Milito says the industry has returned over 3000 of those leases to the government.

"We have to use it or lose it in place," he says. "In fact, a lot of recent data shows that when you drill a well, only 20 percent of the time in deep water are you going to find oil. So you have companies out there spending a hundred million dollars to drill dry wells which give them no benefit in the end, but they're doing it so they can bring these oil and gas resources to the American public."

The argument that oil companies were just sitting on leases was first made by President Obama in his news conference last week, as he was defending his policies in the face of rising gasoline prices. Democrats hope to shield the White House from any blame by shifting it to greedy oil companies, or speculators or even "price-gougers."

But Republicans ridicule such assertions, saying the administration's actions speak for themselves.

"Over the past two years, the Obama administration has delayed, revoked, suspended, or canceled an enormous range of development opportunities,” said Mitch McConnell, the Republican leader in the Senate. “One month after the president took office, his administration cancelled 77 oil and gas leases in Utah - once the review was complete the administration refused to reinstate a single one."

McConnell also notes that in January, the administration announced new restrictions for onshore oil and gas exploration in the Mountain West.

"Then, last April, the administration suspended 61 oil and gas leases in Montana that were issued in 2008 -- then announced that all oil and gas leases in Montana, North Dakota, and South Dakota would be delayed indefinitely," McConnell said.

So Republicans put the blame squarely on the Obama administration while Democrats, worried about rising gasoline prices, place the blame anywhere but on the administration.