Analyst: Congress may punt on spill bill

“The greatest sticking point is the removal of the liability cap for economic damages, which would drive up insurance costs for Gulf of Mexico drilling operations. However, there are a number of tangential sticking points as well. Most notably, Democrats are divided on how much revenue the federal government should share with costal states. Additionally, progressive Democrats remain unhappy with the leadership’s decision to remove all climate change and renewable provisions from the bill. It will be difficult to compel them to compromise further on ‘holding BP accountable.’ Likewise, political pressure to end the [deepwater drilling] moratorium legislatively could fracture Democrats.”

FBR also cites the packed, election-shortened Capitol Hill schedule and other barriers, although it also notes that compromise remains possible, citing negotiations over liability limits among senators including Mary Landrieu (D-La.) and Mark Begich (D-Alaska).

At the very least, FBR predicts, the longer the delay, the better the outlook for independent oil companies (compared to majors like BP and Exxon). “In our view, the capping of the [BP] well, and the likely eventual ‘kill,’ will help alleviate pressure to act precipitously and give the industry the time to marshal evidence and resources against prohibitively restrictive legislation,” FBR writes.