The Next Step: Connecting the Oil Spill to Energy Reform

Chris Good Jun 16 2010, 1:48 PM ET

BP is going to pay: multiple news outlets reported this afternoon, with BP executives meeting at the White House and Obama's ~~Rose Garden~~ [it's raining; Obama ended up speaking inside] press conference imminent, that the company has assented to the plan Obama laid out earlier this week. A $20 billion escrow fund, doled out to damage claimants independently, overseen (we now know) by Kenneth Feinberg.

This makes nearly irrelevant Congress's moves to retroactively lift the liability cap on BP--at least for the time being, until damage claims mount past $20 billion. By that time, the House Energy and Commerce Committee will most likely have mounted enough evidence to eradicate the cap on BP's liability anyway, having found violations of at least a few federal regulations or perhaps enough to deem BP grossly negligent, nullifying the cap in BP's case.

So what's the next step? With the escrow fund in place, the task now is to prevent the crisis from going to waste and connect the oil spill to a need for broader energy reforms.

President Obama began to do that in his primetime Oval Office address last night--but clearly not to the degree many had hoped--telling viewers that America can't keep relying on fossil fuels and needs to accelerate the transition to a clean energy economy.

But Obama didn't "go big" as many had hoped--and the task itself is easier said than done.

Evidently, Senate Majority Whip Dick Durbin sees it that way. CongressDaily's Darren Goode reports on the Democrats' weekly policy lunch, held yesterday at the Capiol:

[Durbin] showcased two polls to colleagues to argue that the public is not making the connection between making BP pay and revamping how the industry drills.

Durbin argued that a recent ABC News/Washington Post poll indicated most people wanted BP to pay for damages done by the Gulf spill regardless of whether it puts them out of business.

He then pointed to a Society for Human Resource Management/National Journal Congressional Connection Poll, conducted with the Pew Research Center, released this week that showed a split among the public over whether to expand offshore drilling or preserve existing drilling but ban any expansion.

The point, he told his colleagues, is that the public is not tying one perceived bad actor with the dangers of all drilling.

Indeed, Republicans have accused Obama of trying to exploit the Gulf disaster. Immediately after the speech, Louisiana Republican Sen. David Vitter told CNBC's John Harwood, in an on-air interview, that as a Louisianan he resented Obama's attempt to use the spill to push his preexisting energy-reform agenda. Republican National Committee Chairman Michael Steele echoed that line of attack. That's the political pushback Obama and Senate Democrats will face as they try to press ahead with energy reforms.

It's also, perhaps, a reason why Obama's push for energy reform was tempered: the liability issue was still unresolved, and a full-on stump speech for carbon pricing may have appeared premature.

As BP has now agreed to Obama's escrow-fund plan, setting aside $20 billion to be overseen by Kenneth Feinberg and paid out to independently evaluated damage claims, a new risk is that Americans will see the problem as largely having been solved--not necessarily requiring the transition to a clean-energy economy that Obama called for in his address last night.

Sen. Lindsey Graham, having jumped ship on the Kerry-Lieberman-Graham energy bill project earlier this year, signaled last night that he remains open to entertaining new options on energy reform, and to the passage of a large package by the end of the year, depending on what that package looks like.

The crisis of damage liability has now mostly been dealt with in the short term. Now begins in earnest the political and policy arguments of using this crisis to implement some sort of broader change.