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Of course, the oil industry won’t be losing out entirely. The main—and indeed most controversial— provision of the bill is the repeal of a ban on offshore drilling that has existed for nearly three decades. Drilling is still prohibited within 50 miles of American shores, but H.R. 6899 would open up the 50-100 mile zone for exploration and drilling.
It’s estimated that only about 20 percent of American offshore oil reserves lie in this region—and many states have their own prohibitions in place already—so the bill is far from what the oil industry and most Republicans had been seeking. Still, environmentalists fear that this is only the beginning of a massive expansion of domestic drilling. If the recent spike in oil prices opened up the 50-100 mile region, will oil rigs be allowed even closer the next time a shock hits the market?
The Bush administration has promised to veto the bill in its current form, but a Senate version of the bill is likely to differ greatly in an effort to bring together a wider coalition and pressure the President to sign it into law before a possible Obama administration might have the opportunity to enact an even less attractive version.
In related news, General Motors CEO Rick Wagoner was in Washington last week, requesting a $50 billion government backed loan to help American automakers retool their operations toward more fuel efficient—and market competitive—vehicles. Congress isn’t likely to grant the industry the full $50 billion, but if it chooses to heavily subsidize vehicles like the Volt in the future, it will be a major boon for Detroit.