Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
A bureaucratic oversight has allowed 24 oil companies to avoid more than $1.3 billion in royalties for the privilege of extracting oil and natural gas from U.S. territory in the Gulf of Mexico - with foreign companies responsible for 55 percent of that total. But this $1.3 billion in forgone royalties pales in comparison to the $60 billion that Americans stand to lose in royalty revenue over the life of these leases. And if Congress repeals the moratorium on Outer Continental Shelf (OCS) drilling that has existed since 1982, these freeloading oil companies will be eligible to bid on new leases, providing them with more record profits while American families are left holding the bag. These 24 companies have posted a combined $365 billion in profits since 2006.
The list of the specific companies comes from a February 2008 U.S. Department of Interior memo recently obtained by Public Citizen. Four of the 24 companies (BP, Marathon, Shell and Walter Oil & Gas) signed voluntary agreements to pay royalties going forward, but they will not be required to pay the more than $200 million taxpayers have been denied on production that already has occurred.
The U.S. Senate is currently considering amendments to the Stop Excessive Energy Speculation Act of 2008 (S. 3268) that would repeal the congressional ban on offshore drilling. The U.S. House of Representatives is also considering measures in the Deep Ocean Energy Resources Act of 2008 (H.R. 6108) that would open up the OCS to new drilling. However, allowing new drilling in these areas will not significantly lower gasoline prices. According to a U.S. Department of Energy report, opening all areas off the coast of the Atlantic, Pacific and the Gulf of Mexico to new drilling "would not have a significant impact on domestic crude oil and natural gas production or prices before 2030." And new areas were opened for drilling in December 2006, when Congress passed the Gulf of Mexico Energy Security Act (Public Law 109-432), which authorized leasing 8.3 million acres in the Gulf of Mexico, 70 percent of which had been previously been protected under congressional moratoria.
It is irresponsible to allow companies that escaped the payment of potentially more than $60 billion in royalties because of a loophole to get access to more leases. There is legislative precedent to force companies to pay their fair share. The House passed a measure in January 2007 that would forbid oil companies from being awarded any new leases unless they renegotiate non-royalty leases from 1998 and 1999. President Bush opposed this part of the legislation, and the Senate has yet to adopt it. The U.S. is the third-largest producer of oil in the world, and 31 percent of that production comes from land owned by the federal government.
http://www.afterdowningstreet.org/node/35270
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