Senator Landrieu agrees with me, and even credits me with drill, drill, drill. She’s on the right side of this issue with retail gas rising at the pump to $2.62 today. That’s up from $1.60 at the beginning of the year. The Conrad amendment will open up the Eastern Gulf for drilling. It’s a good start. But the White House and Congressional Democrats will stand in the way. I give a lot of credit to Sen. Landrieu for hanging in there on this issue.
Here's the transcript of our interview on last night's Kudlow Report.
LARRY KUDLOW: Senator Landrieu, welcome back.
SENATOR MARY LANDRIEU: Thank you Larry, happy to be back.
KUDLOW: All right, we appreciate your time. Now as you know, though gasoline prices are way down from last year’s $4 dollars at retail, today according to AAA, they’re $2.60. They were $1.60 at the end of the year. Some folks are saying this could hurt recovery, that it’s a tax hike. It could raise inflation. What is Congress going to do about this? And isn’t it time to drill, drill, drill?
LANDRIEU: Larry, it absolutely is. These prices are going north, and pretty quickly, and alarmingly because we’re trying to recover. And one thing we could do is drill more here in the United States. Not just for oil and gas, that’s important, and also reach for alternative fuels. But on the drilling issue, you’ve been right on this for a long time. And today we had a very important vote on the energy committee. We opened up a large section of the Gulf which is good, but we did not include revenue sharing which in the long run will not encourage states to drill offshore. And there are lots of resources there.
KUDLOW: How much is this revenue sharing [issue] going to be a sticking point to possible legislation? I mean, I think opening up the Gulf, or the Eastern Gulf, is a terrific idea, at least as a partial solution. How much of the revenue sharing is going to stand alone as a problem?
LANDRIEU: Well actually, it could be a help Larry, in the long run. Because as you know part of the reason that we don’t have a lot of offshore drilling right now in America, although we have a lot of gas, and a lot of oil off our coast we believe, is because there’s really no reason for the states, the coastal states to engage in drilling. They don’t get any direct benefit. They get indirect benefit, it helps the nation. But they don’t get any direct benefit, unlike the interior states that keep 50 percent of their revenues. So I think it’s an important partnership for production.
We hope to open up drilling on the eastern seaboard in some places. We hope to open up the Eastern Gulf. But you know Larry, what we did today will open up the Destin Dome, which has 3 trillion cubic feet of gas at $10 a cubic foot. That is not small change. It’s $30 billion of value. So it’s important that the companies get a share of that, that drill. The state of Florida and the Gulf Coast states should share. And then the Treasury for deficit reduction. It makes a lot of sense to me.
KUDLOW: What are you going to do—the ban on drilling expired last September 30th if my memory serves me. Where does that stand now? Is that ban still banned and does that open the door for the kind of offshore drilling you’re talking about?
LANDRIEU: Larry, the ban is still banned. But the door is opening just an inch. And in fact, about two or three weeks ago, the door was actually slammed shut by a very bad, very detrimental opinion in the DC Court that basically threw our current 5-year drilling plan into limbo. So we’re not moving forward Larry, we’re moving backwards. And the way to move forward again is to continue to present partnerships with the states for drilling. If Florida opens drilling, or North Carolina, or Virginia, let them share in the revenue. Then take that revenue, invest in energy infrastructure, invest in the coasts. Give some of those coastal communities a share of this money and it will benefit the whole nation and we’ll get more oil and gas.
KUDLOW: Well cut a deal, it’ll probably be cheaper for the taxpayers…
KUDLOW: …than bailing out those states anyway. Let me ask you though, I mean it’s a very interesting thing. Oil prices on the world market are now back to $70. They were up $2 bucks today as I’m sure you know. But natural gas prices are real cheap. $3.76. That’s a 19:1 ratio, it’s very interesting. Why not go the Boone Pickens route? He wants to develop natural gas everywhere, liquefy it, turn it into fuel for those big 18-wheelers. He wants to lift the drilling restrictions. He wants to lift the refining restrictions for heavens sake. And lift the shale restrictions. Isn’t this part of the problem? If we put more oil and natural gas on the open market, those prices are going to fall and motorists and consumers are going to be helped.
LANDRIEU: Absolutely, I agree with you 100 percent. And I agree with Boone Pickens on many of his points, but I would just raise this caution. We don’t want to Larry, in America, be over reliant on any one fuel. We want more of it all. We need more oil. We need more gas. We need to develop solar and wind. But in the right way. And so what I cautioned Boone Pickens about, and I have had this discussion with him personally, we don’t want America to be overly dependent on natural gas. We have many resources that we can use, even though I’m a big proponent of drilling. So let’s, you know, let’s go forward with our brains and our heart, and I think we can.
KUDLOW: Well the other thing is refiners aren’t refining. I mean there’s all kinds of restrictions about refining…
KUDLOW: …It seems to me that’s got to be changed. And I want to ask you Senator Landrieu, will you be voting against the tax hike on oil and gas? I can’t imagine how a tax hike on oil and gas is going to encourage anybody to produce, invest and explore.
LANDRIEU: Absolutely. I will be not only voting against it, but I am lobbying against it. I am doing everything I can to convince this administration that they’re wrong. We don’t want to discourage energy production. We want to encourage it, as well as new production, wind and solar. But you don’t want to step on the traditional industry that is doing everything it can to produce energy, despite the fact that Congress keeps putting bans, keeps raising taxes. We’ve got to reverse our policies. You know, President Obama has an opportunity. I hope that he will take it.
KUDLOW: But has not—last question Senator—has not President Obama really tilted the playing field against this? I mean he seems to be opposed to drilling—whether it’s oil, whether it’s natural gas, whether it’s shale. He’s ruling out nuclear because he hasn’t funded the Yucca mountain nuclear waste disposal. And I wonder, has the White House weighed in on this bill from the energy committee that’s going to open up the Eastern Gulf?
LANDRIEU: They have not weighed in yet. But again, I remain hopeful. You’re right. President Obama’s team out of the box has not looked good on these issues. But they have time to adjust. And we’re hoping they will. I am against the taxes on oil and gas. I think the President will hear those objections, not just from me, but from many. I think the President wants to be open to nuclear and to find a way to dispose of this waste. Even if we don’t do Yucca, Larry, there are other ways that we can take care of that waste. I think the President has made it clear that he wants a goal of energy independence. And one more thing Larry, one of the guys you should interview, he’s a great guy on this, is Ken Salazar. Secretary of Interior.
KUDLOW: Mmm-hmm. We’ve talked to him.
LANDRIEU: [He’s] very balanced, wants America to be energy secure. And I think he knows it can’t be done without oil and gas, as well as alternative fuels. So let’s keep talking.
KUDLOW: All right, we’ll go after him. Drill, drill, drill.
LANDRIEU: Allright, thank you. Drill, drill, drill.
KUDLOW: Thank you ever so much Senator.
LANDRIEU: Thank you.