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Letter To The Honorable Dr. Elmendorf, Director of Congressional Budget Office

Location: Washington, DC

Congressman Steve Scalise recently led a bi-partisan, bi-cameral letter requesting an official cost estimate from the Congressional Budget Office (CBO) on lost federal revenues as a result of the Obama Administration's continuing permitorium.

"President Obama's reckless policies are not only contributing to the high gas prices that families are paying at the pump, but on top of that the Administration's own figures show that more than 12,000 jobs have been lost because of his ill-conceived permitorium, straining our already fragile economy and increasing our dependence on Middle Eastern oil," Scalise said. "In this time of record deficit spending, the American taxpayers deserve to know exactly how the Administration's reckless policies are adding even more to the deficit crisis. These cost estimates will give us a clearer and more transparent picture of all the revenue we are losing due to a decrease in energy exploration activities, and I look forward to a quick turnaround from CBO on this request."

Gas prices have nearly doubled since President Obama took office, skyrocketing from $1.83 in January of 2008 to the current average of $3.55 per gallon. Over the course of the ten month permitorium, only two deepwater drilling permits have been issued by the Bureau of Ocean Energy Management.

A copy of the letter led by Scalise follows below.

Dear Dr. Elmendorf:

We are very concerned about the effects of the recent moratorium on Outer Continental Shelf oil and gas production and the continued failure of the Interior Department to issue new permits for exploration and production in the Gulf of Mexico and in Alaska. We are also concerned that this situation has had and will continue to have a negative effect on jobs in these regions, will lead to increased reliance on imported oil and gas, and will decrease our national energy security. In addition we believe that these federal policies will have a negative impact on federal revenues and the budget deficit.

There has been a significant downturn in domestic energy production associated with the delays in issuance of new federal energy leases and permits. We write today to formally request an analysis of the Administration's current Outer Continental Shelf leasing policies and the failure of the Interior Department and the Environmental Protection Agency (EPA) to process OCS leasing applications and associated permits, and the subsequent impact on federal revenues. We need this information to better understand the cost in terms of lost or deferred federal royalties, bonuses, and rental income from the decrease in federal OCS activities.

The Energy Information Administration, the research arm of the Department of Energy, predicted that domestic offshore oil production will fall 13% this year from 2010, due to the moratorium and the slow return to drilling. A year ago, the agency predicted offshore production would rise 6% in 2011. The difference constitutes a loss of about 220,000 barrels of oil a day.

Concerning leasing delays, you may wish to consider the Bureau of Ocean Energy Management, Regulation and Enforcement's (BOEMRE) official estimate of resources and benefits of various planning areas for the current program. You can access this at:

Please also consider the impact of the BOEMRE delays in both shallow water and deepwater permitting, the deferral of Gulf of Mexico lease sales, and the recent decision by the EPA's Environmental Appeals Board to deny air permits for Arctic drilling. In addition, please provide the following:

* An estimate of the potential costs to the Treasury associated with requests by companies for reimbursement due to failure by the federal government to provide opportunity to exercise lease contract rights.

* All information regarding all costs to the Treasury, including litigation expenses and interest, necessary to buy back all nonproducing deepwater and Arctic leases as was required for previous leases offshore in Bristol Bay, the Atlantic, and the Eastern Gulf of Mexico.

* Scoring estimates for the following two scenarios:
o Any leasing, bonus bids, and royalty revenues foregone if the Trans-Alaska Pipeline System were rendered permanently inoperable prior to any production from federal leases in the Alaska OCS.
o Any leasing, bonus bids, and royalty revenues forgone if Gulf of Mexico deepwater exploration permits are not issued within six months to one year from the date of this letter.

Please contact Megan Bel at 225-3015 in Congressman Scalise's office or Liz Craddock at 224-3782 in Senator Landrieu's office should you need additional information.


Sen. Mary Landrieu
Rep. Steve Scalise
Sen. Lisa Murkowski
Sen. Mark Begich
Rep. Don Young

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