Congress faces big push on offshore drilling

WASHINGTON (Reuters) - America's pain at the gasoline pump has been years in the making, but there will be a big push in Congress next week, when lawmakers return from summer break, to fix the problem by expanding offshore oil drilling.

Gasoline prices, down sharply since July, remain high by historical standards, a major issue in the presidential election. Allowing more offshore drilling is seen as the solution by many Americans and politicians.

"Drill, baby, drill!" was the chant from the crowd at this week's Republican National Convention.

When they left for August recess, lawmakers were in a stalemate over Congress' offshore drilling moratorium, with Republicans seeking to lift it and Democrats wanting to keep the ban.

Democratic leaders softened their position during the break, after their party's presidential nominee Barack Obama changed his position. Democratic leaders now say they will have a vote on opening additional offshore areas to drilling as part of a larger energy package.

Republican presidential challenger John McCain also reversed his earlier stand against offshore drilling, but he wants more tracts open to energy exploration than Obama does.

In the wake of Hurricane Gustav, which still has most oil production shut down in the Gulf of Mexico, President George W. Bush urged Congress to expand drilling offshore.

"It ought to cause the Congress to step up their need to address our dependence on foreign oil, and one place to do so is to give us a chance to explore in environmentally friendly ways on the (offshore) Outer Continental Shelf," Bush said.

White House press secretary Dana Perino told reporters on Friday that the administration wants "a deal on energy" from Congress. The clock is ticking as lawmakers plan to adjourn at the end of September to campaign for the November election.

House Speaker Nancy Pelosi said this week Democrats will offer broad energy legislation that opens some offshore areas to drilling "without taxpayer subsidies to Big Oil."

Sixteen senators are pushing compromise legislation that allows drilling 50 miles off the coasts of Georgia, North and South Carolina and Virginia, while providing billions of dollars for alternative energy and conservation efforts by ending tax breaks for oil companies.

Senate Majority Leader Harry Reid has called the proposal a step in the right direction and says he will push a comprehensive package that includes limited offshore drilling.

A Reid spokesman said it was still unclear if the energy bill would stand on its own or be part of legislation that seeks to rein in excessive energy market speculation.

The compromise plan faces strong opposition from many Republicans, who are against raising oil company taxes, want few offshore drilling restrictions and seek oil exploration in Alaska's Arctic National Wildlife Refuge.

The Senate will hold a national energy summit next Friday to consider the various legislative fixes, and then Reid will try to bring a proposal to the Senate floor for a vote the following week, his spokesman said.

Perino said the president wants an energy bill that allows more offshore drilling, develops oil shale fields in the West and extends tax credits for renewable energy sources.

Perino would not say whether the White House would oppose the legislation if it ended tax breaks for big oil firms. But she said the bill should not become a "Christmas Tree" loaded down with lots proposals the administration could not support.

Red Cavaney, president of the American Petroleum Institute, told Reuters he did not think lawmakers would break their deadlock and pass an energy bill. "I don't think it's realistic," he said. (additional reporting by Richard Cowan in Washington)