A Republican proposal to expand offshore drilling was blocked in the U.S. Senate, a day after Democrats failed to advance legislation that would repeal $21 billion in tax breaks for five multinational oil companies. Supporters of the legislation fell 18 votes short today of the 60 needed to advance, with five Republicans joining Democrats in opposition. The tax repeal measure was eight votes short of the required threshold yesterday. Democrats said the Republican-backed offshore bill, which sought to expand lease sales and speed approval of drilling permits, ignored lessons from the 2010 BP Plc (BP/) oil spill in the Gulf of Mexico and wouldn’t provide drivers relief at the pump. The Republican-led House passed similar bills this month. “You would think the BP spill never happened,” said Senator Dick Durbin, an Illinois Democrat. “This bill is pointless and dangerous.” The blow out of BP’s well triggered an explosion that killed 11 rig workers and unleashed about 4.9 million barrels of oil into the Gulf, the largest spill in U.S. waters. Republican Senators Jim DeMint of South Carolina, Mike Lee of Utah, Richard Shelby of Alabama, Olympia Snowe of Maine and David Vitter of Louisiana opposed the bill. Some party members said the measure didn’t do enough to expand drilling. No Democrats supported the bill. Senator Max Baucus, a Montana Democrat, didn’t vote. The failure of the two bills leaves Democrats and Republicans divided on energy policy as drivers face gasoline prices that nationally average about $4 a gallon. Modest Effort Republicans, who criticized Democrats yesterday for singling out oil companies for tax increases, said their legislation was a modest effort to raise oil production as gasoline prices climb. The measure sought to require lease sales in the Gulf of Mexico and off the coasts of Virginia and Alaska, and set a permit deadline with applications automatically approved if no action was taken within 60 days. Senate Republican leader Mitch McConnell of Kentucky said the measure would “put downward pressure” on gas prices, help alleviate dependence on foreign oil and create jobs. The legislation promoted safety by requiring third parties to verify response plans in the event of a spill and creating an Energy Department task force to improve drilling practices, McConnell said. The measure would have extended leases for one year to compensate for delays from the deep-water drilling moratorium imposed by President Barack Obama after BP’s spill. That ban was lifted in October. The Interior Department on May 17 said 10 oil leases in the Gulf were extended to make up for delays. ‘Notoriously Slow’ Senator Lisa Murkowski, an Alaska Republican, said she wanted the legislation to do more, such as opening the Arctic National Wildlife Refuge in Alaska to oil and gas production. The bill’s provisions would streamline a “notoriously slow” bureaucracy and expand drilling, she said. Democrats failed yesterday to advance the tax bill that backers said would take away benefits oil companies don’t need after posting first-quarter profits that exceed $30 billion. The tax legislation targeted about $2 billion in annual tax breaks for Exxon Mobil Corp. (XOM) of Irving, Texas, London’s BP, Houston’s ConocoPhillips (COP), Chevron Corp. (CVX) of San Ramon, California, and The Hague-based Royal Dutch Shell Plc. (RDSA) Democrats said they wanted to use the money for deficit reduction. Senate Majority Leader Harry Reid plans to try to revive the measure in budget talks with Republicans, who are trying to cut more than $6 trillion in spending. Gasoline prices averaged about $3.926 a gallon yesterday, compared with $2.859 a gallon a year ago, the AAA reported today. The bill is S. 953. To contact the reporter on this story: Jim Snyder in Washington at jsnyder24@bloomberg.net To contact the editors responsible for this story: Steve Geimann at sgeimann@bloomberg.net; Larry Liebert at lliebert@bloomberg.net

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