The Commerce Department reported the nation's retail sales dropped by 3-tenths-of-1 percent in August. The news was disappointing to analysts who had been expecting an increase. On a brighter note, auto sales rose almost 2 percent in the wake of last month's decline.
The trade deficit jumped in July hitting its highest level in 16 months paced by record prices for crude oil. The gains in foreign oil imports effectively negated strong exports, which also posted an all-time high.
The politically sensitive trade deficit with China increased 16.1 percent to $24.9 billion, the second highest gap on record.
Despite Hurricane Ike bearing down on the Louisiana coast -- home of most of the nation's oil refineries -- the price per barrel dropped below the $100 mark only briefly before settling at $101.18. This was first time since April the price of crude oil dropped below the century mark and down from the record of $147 per barrel set in early July. It is against this backdrop that Congress is pondering America's energy future.
The measure would open all federal waters 100 miles away from shore while individual states could decide to open energy development beyond 50 miles of domestic land. Under the House Democrats' plan, all federal waters within 50 miles of the shoreline would still be off-limits. And in Florida, home to more than 1,100 miles of coastline, waters would be under complete federal protection until 2022.
Additional sections of the proposal call for rolling back tax breaks for oil companies and requiring new royalty payments to spur renewable energy programs.
The House plan comes after months of congressional wrangling and Presidential campaigning.
Sen. John McCain, R – Arizona: "We need to drill offshore and we need to drill now! Drill now!"
Energy legislation is likely the foremost issue facing lawmakers following an August recess that included two major political conventions. At the Democratic National Convention in Denver, Colorado, Senate leader Harry Reid and Speaker of the House Nancy Pelosi placed the blame of slow energy legislation on Republicans.
Sen. Harry Reid, D-Nevada: "The Republicans are for the status quo. They're for the oil companies. Oil companies don't want renewable energy. It takes away from the billions they're making."
Rep. Nancy Pelosi, D-California: "Pelosi: We have a comprehensive energy policy that will invest in clean, renewable resources, like wind, solar, and biofuels. Democrats have passed that in the house over and over again, only to be stopped by the Republicans in the Senate."
At the Republican National Convention in St. Paul, Minnesota, Republican leaders were pointing the finger back at Democratic leadership.
Sen. Saxby Chambliss, R-Georgia: "Well, Republicans don't control the agenda in Washington now, and it's in the hands of the Democrats."
The partisan rancor over offshore oil drilling has largely pushed other incentives like tax credits for wind energy to the sidelines. The wind energy tax credit, an essential government incentive for wind development is set to expire in December.
American Wind Energy Association rep: "The energy sector is perhaps the most heavily subsidized sector of the economy. And to take away the wind production tax credit and basically say to the wind industry in its youth needs to compete against heavily subsidized oil and gas and nuclear and coal doesn't really make a lot of public policy sense."
Members of the American Wind Energy Association are lobbying congressional leaders to push an energy package that includes a wind tax credit extension. But previous attempts over the past 6 months have fallen short of final passage.
A top private investor, oil magnate T. Boone Pickens, told Market to Market last month that wind energy "would not work without tax credits."