MR. KUDLOW: All right, more drill, drill, drill! Congress, at the end of the day, is going to have to decide this issue. Here now, House member John Peterson, Republican of Pennsylvania, Democrat Xavier Becerra of California.
Let's just take a quick listen, gentlemen, of President Bush this morning.
GEORGE W. BUSH: (From videotape.) We should expand American oil production by increasing access to the Outer Continental Shelf, or OCS. Experts believe that the OCS can produce about 18 billion barrels of oil. That would be enough to match America's current oil production for almost 10 years.
MR. KUDLOW: All right. Xavier Becerra, great to see you. It's been a while. Isn't Mr. Bush right with $4 gas at the pump and 140 (dollars a barrel) in the open market? Isn't it time for some offshore drilling?
REP. BECERRA: Larry, for years, the oil companies have had access to 80 percent of the Outer Continental Shelf. It's not the fault of Congress that the oil companies are sitting on some 68 million acres of drillable land. About 5 million barrels of oil could be taken out of that land. Some 10,000 leases are already in the hands of these oil companies. They've been sitting on them, and I suspect we know why. For the last eight years, the oil companies have been drafting the energy policy for the White House.
MR. KUDLOW: Well, John Peterson, all right, oil companies drafting the energy policies. They wish! But when Xavier, John, says 80 percent offshore, I'm not aware of 80 percent offshore. I don't understand that. You all in Congress have stopped that.
REP. PETERSON: Eighty-five percent of offshore is off limits. I mean, the whole East Coast, the whole West Coast and one-third of the Gulf is off limits. That's just not an accurate figure. It's time for America to start producing. The American public get it. You know, we're up about 70 percent of the American people want us to produce energy offshore, onshore. They're tired of these prices. Today we had $136 (per barrel) oil, $13.28 for natural gas. That means home heating's going to double next year. Our companies that use huge amounts of natural gas are not going to be able to afford to be in this country. That's not a world price.
There's a crisis in this country. The American public know it, but Congress just doesn't get it.
MR. KUDLOW: Xavier Becerra, aren't you worried that this issue could really turn around against you? I mean, John Peterson just talked about the price of gas at the pump and oil. If you say no, no, no and you stand pat and you won't let them drill, isn't that going to turn against you come November?
REP. BECERRA: Larry, since President Bush took office, the price of a barrel of oil has gone up four times. Now, remember that the president has had every opportunity to get these energy companies, these oil companies to go out and drill and take advantage of those 10,000 leases that they have held. I think what Democrats are prepared to do is say this, Larry, use is or lose it. You've got 10,000 leases to go drill on some 68 million acres of federal land offshore, onshore. Use it or lose it. If you're not going to use that land you've already got a lease for already to put a drill bit in the ground, then let someone else do it because we know that there is a need for oil.
Even though we consume far more than we ever produce, we still know that we have to do everything possible. But these oil companies are sitting on 10,000 leases on 68 million acres of leasable land.
MR. KUDLOW: I know. But Mr. Peterson, I've heard people rebut that from the business. They say yeah, they have the leases, but first of all, they can't get the permits because of regulatory interference. And second of all --
REP. BECERRA: Have they tried, Larry? They haven't even tried!
MR. KUDLOW: -- the greenies -- that's not what I hear, and I want to let Mr. Peterson answer it. And the greenies stop them by holding --
REP. BECERRA: Then, Larry, they should give up those leases. If they're not going to use them, they should give them up.
MR. KUDLOW: Then you're back to zero, Xavier.
REP. BECERRA: No, no, no, no, no.
MR. KUDLOW: Let me let Mr. Peterson. The issue is -- let me let Mr. Peterson, please, Xavier. The issue of leases doesn't mean permits. And the issue of leases doesn't mean that the environmental groups won't take them to court to stop the permits.
REP. PETERSON: That's right. The first thing they have to do is go out and assess where to drill. After they've done that, they do test wells. Then they have to go back and plan their drilling program. Then they have to get NEPA studies and about 10 other clearances. It takes years to do that. Then they have to build their rigs. If it's in deep water, it takes five to six to seven years just to get prepared to drill. In shallower water, it can be quicker.
Folks, there's a lot of this in production. Some of these areas, they've tried and hit dry holes. When you hit dry holes, you don't go back. The prime spots offshore are off limits. We have not allowed the whole East Coast, the whole West Coast, one-third of the Gulf are not under lease. Only 2.5 percent of the Outer Continental Shelf is under lease.
REP. BECERRA: John, I invite you to join us in co-authoring legislation that would say to these oil companies, if you've got these leases and if they're no good then let them go, let someone else use it. Would you join me in that?
REP. PETERSON: It's not government's role to do that.
MR. KUDLOW: I want to go back. And Xavier, President Bush said today, and I didn't know this, he said the Green River Basin up in the Rocky Mountains, which is home to possibly 800 billion-equivalent barrels of oil, was placed off limits by last year's Democratic budget resolution. Now, a lot of people didn't know that. Why, if you're talking about all these leases, why are you stopping the companies from going in and extracting shale? That's a huge source!
REP. BECERRA: Larry, you're turning the corner in an ally where we've got many opportunities. Why is it that the Bush administration isn't telling these oil companies, use those leases that you currently have? If it's going to take a long time, as John is saying, to get these permits, then start where you already got a lease. Why go into territory where you don't even have a lease? We know there's oil underneath these lands, these 68 million acres of land. We know that there's oil there. The oil companies know that there's oil there. And meanwhile, they continue to make record profits, but they're unwilling to develop these. It doesn't make sense, Larry.
REP. PETERSON: They're producing the majority oil offshore. Do you want to continue to enrich the Far East? Do you want them to own this country?
REP. BECERRA: Absolutely not.
MR. KUDLOW: Last word, John Peterson.
REP. PETERSON: They pay an annual rent for that lease. After so many years, it expires. We need to open up.
REP. BECERRA: Use it! Use the lease! Use the land!
REP. PETERSON: Open up the primary areas. The primary areas on the East Coast and the Gulf and Florida are not under lease.
We're depriving the American people of fair energy prices. And this Congress has got to stop dragging its feet and saying no, no, no!
MR. KUDLOW: I gotta cut off. I hear both of you. We didn't really make much ground. I just don't understand why the Congress would stop people from going into the shale. That's the part I don't get.
All right, House members John Peterson, Republican of Pennsylvania, Xavier Becerra, Democrat of California, thank you.