Senators' plan would allow drilling off N.C.

A bipartisan group of senators Friday unveiled a compromise that would ease restrictions on oil exploration off parts of the East Coast, including the Carolinas, while preserving the ban off the West Coast.

The possible deal was announced on the same day that Democratic presidential candidate Sen. Barack Obama dropped his opposition to offshore drilling, saying that he could go along with the idea if it was part of a broader energy package.

In unveiling the ambitious plan, 10 senators – five Democrats and five Republicans who call themselves the Gang of 10 – hope to break a partisan standoff that sent lawmakers home on their monthlong summer recess Friday without action on major legislation to address high gasoline prices.

However, the proposal's prospects appear a long shot for this year, with time running out on the congressional session. And in a politically charged election year, parties are stepping up attacks to highlight differences on issues such as energy policy.

Although a compromise, a number of the proposals remain controversial. Included are proposals to expand drilling in the Gulf to within 50 miles of Florida, help revive the nuclear industry and boost efforts to convert coal into motor vehicle fuel.

North Carolina's two main gubernatorial candidates take opposite stands on the issue of drilling. Charlotte Mayor Pat McCrory, a Republican, has called for an end to the 27-year ban on oil and gas exploration off the Atlantic Coast. Lt. Gov. Bev Perdue, a Democrat, opposes offshore drilling.

Sen. Elizabeth Dole, R-N.C., changed her mind in recent weeks and now favors looking for oil off the coast. Sen. Richard Burr, R-N.C., has consistently supported offshore drilling if states support it. Like Dole, he co-sponsored a bill to search for more domestic oil.

Florida's senators, though, criticized the plan announced Friday.

The legislation is the first sign of bipartisan progress on an issue that has stirred political anxiety and animosity on Capitol Hill.

Senate Majority Leader Harry Reid, D-Nev., said he was hopeful the compromise plan “can begin to break the current legislative stalemate on the Senate floor.” The proposal would offer a concession to Republicans who have called for increased domestic production by allowing Virginia, the Carolinas and Georgia to grant permits for drilling 50 miles off their shorelines and opening a new area in the Gulf of Mexico, 50 miles off Florida's coast, to energy exploration.

The senators excluded any effort to lift the long-standing ban on new drilling off the California coast or to open the Arctic National Wildlife Refuge to energy exploration as too contentious and likely to complicate passage of a compromise bill.

In a significant shift, the group's Republicans, including Sen. Lindsey Graham of South Carolina, agreed to repeal a key oil industry tax break and force oil companies to pay billions of dollars in royalties to the U.S. Treasury for drilling in the Gulf of Mexico.

Democrats have tried to repeal oil industry tax breaks in the past but have been thwarted by a Republican-led Senate filibuster. But a number of Republicans are finding it hard to defend the oil industry tax breaks while oil companies record high profits.

In a statement Friday, Obama welcomed the proposal, saying it includes measures he has advocated such as repealing oil industry tax breaks.

He earlier told The Palm Beach Post: “My interest is in making sure we've got the kind of comprehensive energy policy that can bring down gas prices,” he said.

“If, in order to get that passed, we have to compromise in terms of a careful, well thought-out drilling strategy that was carefully circumscribed to avoid significant environmental damage – I don't want to be so rigid that we can't get something done,” the paper quoted Obama as saying.

The change is dramatic because Obama often pointed to his opposition to drilling as a key difference between himself and presumptive Republican presidential nominee Sen. John McCain.

“I will keep the moratorium in place and prevent oil companies from drilling off Florida's coasts,” Obama said in June.

Friday, he said he was still not a fan of drilling, telling the Palm Beach paper, “I think it's important for the American people to understand we're not going to drill our way out of this problem.”

McCain reacted quickly to Obama's switch in positions, telling The Associated Press, “We need oil drilling and we need it now offshore. He has consistently opposed it. He has opposed nuclear power. He has opposed reprocessing. He has opposed storage.”

Experts estimate that even if drilling proves to sharply increase oil supplies, its effects will not be felt for at least seven and probably 10 years.

McCain has made it a centerpiece of his stump speeches and some of his television ads.

Political momentum has been moving in favor of opening up U.S. coastlines. There were two bars to offshore drilling, one first imposed by Congress in 1981 and another signed by President Bush's father in 1990 and renewed in 1998 by President Clinton. Bush lifted the executive ban last month.

The Los Angeles Times, McClatchy Newspapers and (Raleigh) News & Observer researcher Lamara Williams contributed.