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Special Energy Report / BUDGET

Offshore Drilling, Renewable Energy Stressed in Interior Request

photo of Olga Belogolova
February 13, 2012

The Interior Department would see only a 1 percent increase in overall funding next year under President Obama's 2013 budget proposal, but a significant boost is proposed for oversight and development of offshore oil and gas resources in keeping with the White House's recent push to expand domestic energy production.

The department's Bureau of Ocean Energy Management and its Bureau of Safety and Environmental Enforcement would together receive $386 million next year, an increase of about $28 million from the current budget.

In the wake of the disastrous BP oil spill in 2010, Interior has worked to revamp its oversight of offshore oil and gas development by breaking up the old Minerals Management Service into two agencies: one handling leasing and environmental review and one handling permitting, inspections, and safety of drilling operations.

 

A portion of the proposed $386 million would also go toward completion of a Gulf of Mexico lease sale to round out a 2007-2012 exploration and production plan. Some funds also would go for implementation of the leasing plan for 2012-2017, which Obama touted in his State of the Union address as opening up more than 75 percent of oil and gas resources on the Outer Continental Shelf. The request once again, as it did for 2012, also looks for new revenues in oil and gas inspection and leasing fees.

The budget also includes a push for renewable-energy development on public lands, requesting $86 million to review and permit new renewable-energy projects on federal lands and waters. The budget sets a goal of permitting facilities that would produce 11,000 megawatts of new solar, wind, and geothermal power by the end of 2013.

Overall, Obama’s 2013 budget request proposes $11.4 billion for Interior, an increase of about 1 percent from the 2012 enacted level of $11.2 billion. Last year, Obama requested $12.2 billion for Interior, with a heavy emphasis on revamping offshore oil and gas oversight in the wake of the BP spill.

In this year’s request, Obama once again calls for the end of tax breaks for oil and gas companies — a request that has gone unanswered for many years and several administrations.

“Oil and gas subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices,” the request says, as Obama has argued multiple times in the past. The 2013 request calls for the elimination of some 12 tax breaks for oil, gas, and coal companies to raise $41 billion over 10 years.

Despite the dim prospects for this proposal, the oil and gas industry was quick to go on the defensive.

“The president’s 2013 budget plan returns to the well of bad ideas and backtracks on his State of the Union commitment,” American Petroleum Institute President Jack Gerard said on Monday, referring to Obama’s offshore drilling and domestic-production push in his address to Congress last month.

“Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home,” Gerard said in a statement.

Meanwhile, Center for American Progress senior fellow Dan Weiss praised the budget proposal, arguing that it “would make taxes fairer” by eliminating the industry breaks. CAP highlighted the “humongous earnings” of the five biggest oil companies: BP, Chevron, ConocoPhillips, ExxonMobil, and Shell.

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