Fox News has a breaking story that key Senators from both parties may have reached a compromise on energy that includes allowing for drilling in the outer continental shelf (OCS). It would take a kitchen-sink approach urged by Republicans all along — more work on alternatives and conservation, but also the removal of restrictions on domestic production to alleviate the supply crisis in the world market. It also pointedly excludes the populist demonization of commodities traders:

A bipartisan group of 10 senators offered an energy plan Friday aimed at producing more domestic oil via offshore drilling, reducing energy prices, and aiding the troubled economy.

The plan also would require automobiles to be more fuel efficient and would provide research money for improved batteries to move away from petroleum-products in cars: the plan calls for 85 percent of vehicles to run on non-petroleum-based fuel in 20 years.

Senators said the bill also would promote more renewable energy sources and nuclear energy, as well as carbon capture techniques to reduce greenhouse gas production through tax and other incentives.

The plan would lift restrictions off of the Atlantic coast and the eastern Gulf of Mexico. Drilling would take place 50 miles or more from shore to buffer the coast from any potential environmental damage. The report does not specify whether the plan will open the interior for drilling for oil shale and natural gas.

Those in the gang of 10 are Sens. Mary Landrieu, D-La; Saxby Chambliss; R-Ga, John Thune, R-S.D.; Ben Nelson, D-Neb.; Lindsey Graham, R-S.C.; Mark Pryor, D-Ark.; Johnny Isakson, R-Ga.; Blanche Lincoln, D-Ark.; and Bob Corker, R-Tenn.

Harry Reid, on his way out of town, issued a mildly supportive statement, and Nancy Pelosi hasn’t yet commented. This compromise could save the Democrats from their own leadership, and it represents a major rebellion against the hard-line demagoguery provided by Reid and Pelosi. This expansion represents a good start to restoring some common sense to American energy policy and marginalizing the radical environmentalists who have taken it hostage for a generation.