UPDATE: Obama’s Energy Plan Speech today.

Over the weekend, both Obama and McCain signaled they’d accept a compromise on off-shore drilling. Obama doesn’t think more drilling is the solution but would consider it as part of a comprehensive set of solutions aimed at alternative fuels, increased efficiency, and a transition away from reliance on oil.

McCain is still chanting "drill more, drill now", and raking in the oil industry contributions(h/t TPM), but his spokesperson indicated Sunday he is willing to consider other measures to get it.

Obama’s willingness to accept a compromise came Friday, after a "gang of 10" Senators proposed a "bipartisan" compromise that would limit new drilling to the East and Gulf coasts (with the respective states’ concurrence), but not California and Alaska. In exchange, Democrats would finally secure approval of the tax credits/rebates for renewable energy sources that expire this year and Republicans have blocked. Among other things, the package would also provide new funding for low income energy assistance; it would set ambitious goals for a non-oil based auto fleet and provide incentives for US automakers to build more efficient cars.

Nancy Pelosi continues to oppose further off-shore drilling as a fraud that will do nothing in the near term to increase supplies or lower prices, and little in the long run. But while undeniably valid on the merits, that position was apparently losing popular support.

I think this is a smart move by Obama. More off-shore drilling is environmentally risky; as a supply or near-term price policy it’s delusional, and if done alone only locks us into an untenable future. But conditioning it in the framework of strict environmental protection, rather than immediate price/supply relief, and as part of a transition to something else, is where the debate needed to be.

The Republicans are demanding to drill more, drill now, but no new drilling will happen for years because it takes time to do the permitting and there are no additional rigs available. But now Republicans and oil companies will have to pay for it with immediate support for alternatives they had been holding up.

Obama had already proposed a $1000 rebate to help consumers deal with high gas prices this summer and higher heating costs next winter. (See new ad. h/t JPL9) Today he is scheduled to give an energy speech in Lansing, Michigan. Acccording to Chicago Sun Time’s Lynn Sweet, Obama’s plan will include the rebate, 5 million new green jobs, and a call for the US to "eliminate our need for Middle Eastern oil in 10 years."