Democrats will not fight to keep the moratorium on off-shore drilling in their efforts to put together a continuing resolution to keep government funded into next year.  Congressional leadership has conceded the issue to Republicans, who have staged protests and raised the profile of energy policy over the last six weeks.  Starting on October 1, states will have no federal restrictions on oil production:

Democrats have decided to allow a quarter-century ban on drilling for oil off the Atlantic and Pacific coasts to expire next week, conceding defeat in an months-long battle with the White House and Republicans set off by $4 a gallon gasoline prices this summer.

Appropriations Committee Chairman David Obey, D-Wis., told reporters Tuesday that a provision continuing the moratorium will be dropped this year from a stopgap spending bill to keep the government running after Congress recesses for the election.

Republicans have made lifting the ban a key campaign issue after gasoline prices spiked this summer and public opinion turned in favor of more drilling. President Bush lifted an executive ban on offshore drilling in July.

“If true, this capitulation by Democrats following months of Republican pressure is a big victory for Americans struggling with record gasoline prices,” said House GOP leader John Boehner of Ohio.

This effectively ends this as an issue for the 110th Congress.  Democrats thought they could get a partial moratorium past the Republicans, one that would have kept drilling at least 50 miles off from shore, but President Bush threatened a veto on any continuing resolution with that kind of language.  The Senate had attempted to fashion the exact same compromise, but in the end, Republicans refused to agree.

Will this mean drilling can commence?  Not quite.  The states have to lease the lands as well as the federal government, and states won’t likely do so without revenue sharing.  Democrats tried blocking that in the Senate compromise, but that provided another point of failure for any compromise.  Congress has to approve that action, and right now it still appears that Democrats want to use that to limit production.

The CR will likely come up for a vote tomorrow, and it’s not just missing the drilling moratorium.  Congress has stripped out some popular programs with Democrats to ensure passage and agreement with the White House, including higher unemployment benefits and food stamps.  It still retains five billion dollars in federal heating subsidies for the poor, but most of the rest of the spending priorities of Harry Reid and Nancy Pelosi have disappeared along with the moratorium.

This puts quite the capper on the 110th.  Not only did Democrats fail to achieve their broad policy goals, they failed on almost every specific goal they set in 2006.  They failed to stop funding the Iraq war, they failed to impeach George Bush, and they surrendered on energy policy.  Their only policy goal achieved — an increase in the minimum wage — came in a war-funding bill.

This battle may have been won, but the larger war for a rational energy policy continues.  Congress has to pass a revenue-sharing bill with the states in order to get investment started in American production — a process that will create American jobs and keep our wealth in the US rather than overseas.  With the meltdown in the financial markets still looming, this could not come at a better time.