API chief sees energy bill deadlock in September

By Richard Cowan

ST. PAUL (Reuters) - The U.S. Congress is unlikely to pass energy legislation this year to bring down high oil prices, despite intense interest for competing plans among Democrats and Republicans, American Petroleum Institute President Red Cavaney predicted on Tuesday.

With the Senate and House of Representatives set to return on Monday from a five-week break, lawmakers are expected to resume where they left off, in a high-pitched argument over how best to ease consumers' gasoline and heating worries, just two months before presidential and congressional elections.

This legislative session is expected to last only three weeks, likely leaving Congress dark until the next president takes over.

Cavaney, who is attending the Republican convention that will anoint Sen. John McCain as the party's presidential candidate, was skeptical of a compromise resulting in passage of legislation.

"While it would be great (to pass a bill)...I don't think it's realistic," he said. He had no prediction for next year's prospects, saying that depended on election results.

As Republicans have pleaded for lifting the national moratorium on off-shore oil drilling, including in sensitive Alaskan regions, many Democrats have pushed a different approach that aims to lower oil prices short-term while pressuring industry to drill on already leased acres. They also want to repeal some industry tax breaks and use the revenue to encourage alternative energy development.

A compromise crafted by a bipartisan group of senators, taking steps toward a limited number of states expanding offshore drilling (notably not California or Alaska), has been roundly criticized by Republican leaders in Congress and the oil industry.

Asked whether the API could embrace such a compromise if that was the best that could be achieved, Cavaney dismissed the initiative, saying it would "automatically levy taxes on industry" without guaranteeing additional acres of drilling offshore.