U.S. oil spill hurting energy moves in Congress

File photo shows President Barack Obama (L) stepping off Air Force One with Senator Bill Nelson (D-FL) as they arrive in Miami, Florida, October 26, 2009.

WASHINGTON (Reuters) - The massive, uncontrolled oil spill in the Gulf of Mexico is roiling President Barack Obama's carefully laid plans to open up America's coasts to drilling again, while rattling Congress to a point where the oil industry's exploratory plans could face a big shake-up.

U.S. politicians are now in no mood to consider plans to open up new areas for drilling but if the crisis drags on, it could also affect exploration in existing production areas, such as the Gulf.

BP Plc's ruptured oil well is spewing some 5,000 barrels of oil a day and officials are saying it could take three months or more to cap the gusher. Depending on weather and currents, the oil could hit the coasts of Louisiana, Florida and other coastal states.

"Hopefully this accident is just that: an isolated accident," Senator Joe Barton, a Texas Republican, said after meeting with BP executives in Washington. "What I don't want to happen is mass hysteria to take hold and we put a moratorium once again on exploration and a moratorium on new drilling and perhaps even a moratorium on existing production."

But Amy Myers Jaffe, director of the Baker Institute Energy Forum at Rice University in Houston, said the government might go so far as to order oil companies not to search for oil on any deepwater tracts they have already leased.

"If this spill turns out to be extremely severe, catastrophically severe, and by that I mean thousands and thousands of barrels of oil wash ashore in Louisiana, especially if it blows to Florida ... yes I think you could see a call to suspend any new drilling until a full investigation is made."

Senate Majority Leader Harry Reid, describing the oil spill as "staggering" and "scary," said: "I think we're all going to back off from offshore drilling until we get a better handle on how we can make it safe."

'DEAD ON ARRIVAL'

At immediate risk is Obama's balancing act in which he backs new offshore exploration to win over Republicans so he can follow an agenda closer to his heart: enact a climate bill that fights global warming and gets the country to embrace renewable energy.

"The president's proposal for offshore drilling is dead on arrival" in Congress, Democratic Senator Bill Nelson of Florida proclaimed at a press conference.

Obama had been calling for new oil drilling in the eastern Gulf of Mexico off Florida, but no closer than 125 miles from shore, and along the East Coast from Delaware to central Florida.

Those plans are now under review.

Obama's offshore oil drilling initiative might not be the only one facing tougher prospects in Congress.

Climate control legislation, which only had a slim chance this year, could be further hobbled because of the oil spill.

That's because the bill to reduce carbon dioxide emissions and other pollution linked to global warming was being coupled with expanded offshore oil drilling to lure enough Republican support for passage.

Senator Joseph Lieberman, one of the Senate's leading advocates for climate legislation, said the measure he has been writing would put tougher rules on expanded oil drilling.

"You can't drill short of the 75 miles from the coast," Lieberman told reporters. That could provide more protection from environmental disasters than a 50-mile limit previously envisioned on the East Coast.

END OF CLIMATE CONTROL BILL?

But a top Senate Republican aide did not think anything would save the climate bill after the oil spill.

"This puts the nail (in the coffin) in climate" control legislation, said the aide, who asked not to be identified.

That is because the "grand bargain" being crafted for the climate and energy initiatives would unravel without expanded oil drilling, many fear.

It was unclear whether other incentives being tucked into the climate change bill -- to help grow the U.S. nuclear power industry and fund "clean coal" research projects -- could be enough to entice Republicans and wavering Democrats if the offshore oil incentives were removed.

Reid told reporters the oil spill should expedite alternative energy legislation, which would encourage the use of cleaner power sources, such as wind and solar.

But even that is clouded because of the oil spill, since that Senate bill also contains plans for more offshore oil drilling, congressional sources pointed out.

As many members of Congress considered what the next steps would be on modernizing the U.S. energy sector and reducing harmful greenhouse gas emissions, oil company and Obama administration officials fanned out across the Capitol to brief lawmakers on the oil spill.

Democratic Senator Robert Menendez, who has long argued that new offshore oil drilling would threaten coastal vacation spots and other businesses in his home state of New Jersey, on Tuesday called on the Obama administration to halt all new projects.

California Governor Arnold Schwarzenegger pulled his support for expanded drilling off his state's coast, citing the Gulf spill. His about-face came after he had called for more drilling off California's coast to raise money for the state government, which faces a $20 billion budget shortfall.

(Additional reporting by Susan Cornwell; Editing by Russell Blinch and Eric Walsh)