... and lifting the Congressional moratorium on offshore drilling would increase the oil companies' debt to American citizens to $60 billion over the life of those leases.
It’s a scam, folks; plain and simple. From 1995 on, Exxon-Mobile and other oil companies have been freeloading at the expense of all Americans. In short, a bureaucratic oversight ploy has enabled a total of 24 oil companies to avoid paying more than $1.3 billion in royalties to the American people for the privilege of drilling oil and natural gas from the Gulf of Mexico alone.
And, that’s only the beginning.
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 even more record profits while American families are left holding the bag. These 24 companies have posted a combined $365 billion in profits since 2006.
Is there no end in sight to the fleecing of America?
To my mind, (and I may be wrong here in my conclusion) the so-called "oil speculation" enigma -- leading to exorbitant prices at the gas pump -- is only a ruse. No one seems to know how this speculation works; who’s doing it, and how long it will last. And, as long as we allow the process to remain an enigma, gas prices will continue to break the backs of the middle class. The big oil companies have only profits in mind. Remember, these leases normally last for decades, and they'd like nothing better than to secure legal rights to all potential oil fields in the U.S.
But, I digress...
From Tyson Slocum, Director of Public Citizen’s Energy Program:
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) (pdf), which authorized leasing 8.3 million acres in the Gulf of Mexico, 70 percent of which had been previously been protected under congressional moratoria.
I can’t believe Congress is even considering opening up more areas to these greedy corporate fascists. Considering the fact that big oil has already escaped the payment of potentially more than $60 billion in royalties because of a loophole; to allow them even more access to drilling would be the height of irresponsibility.
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.
It should not come as a surprise that much of the impetus for opening the OCS comes from an expensive advertising campaign financed by Former House Speaker Newt Gingrich’s American Solutions for Winning the Future. When Gingrich was speaker, Congress passed the Deep Water Royalty Relief Act of 1995. It turned out to be an even bigger favor than Congress had intended.
And, to think this all came about as a bureaucratic snafu by the Department of Interior during the Clinton administration’s implementation of the act. Subsequently, Exxon-Mobile and other companies that secured the leases back in 1998 and 1999 were exempted from paying royalties; regardless of the prevailing market price of oil. This stands in stark contrast to other, similar leases, which require the payment of royalties if the price of oil exceeds a certain threshold.
It should be noted here that the day the bill was signed in November 1995, West Texas Intermediate oil was trading at $18.28/barrel. With oil now trading nearly 600 percent higher at more than $120/barrel, these companies have been and will be extracting very valuable energy from public land without paying any royalties to American taxpayers.
Unless Congress fixes the widespread mismanagement of the royalty program that allows oil companies to underpay royalties, Americans will continue to be cheated out of hundreds of millions of dollars. The expansion of OCS development will no doubt enrich oil companies in general, including foreign-owned oil companies who make up the majority of companies vying for the new leases. Back in March 2007, a former top auditor at the Department of the Interior testified under oath that his superiors severely limited his ability to collect royalty payments from oil companies that were clearly owed the American people.
A jury in a case filed in 2007 under the False Claims Act found that Kerr-McGee (now Anadarko), one of the holders of the no-royalty leases from 1998 and 1999, deliberately underpaid more than $7.5 million in royalties.
The 24 companies that have already been extracting oil and natural gas from the Gulf of Mexico royalty-free and have thereby underpaid $1.3 billion in royalties are:
Anadarko / Kerr-McGee (U.S.); ATP (U.S.); BHP Billiton (Australia); BP (U.K.); Carlyle/Riverstone (U.S.); Chevron (U.S.); Devon (U.S.); Encana (Canada); ENI (Italy); Howell Group, Ltd (U.S.); Marathon (U.S.); Marubeni (Japan); Newfield Exploration (U.S.); Nexen (Canada); Nippon Oil (Japan); Noble Corp (Cayman Islands); Occidental (U.S.); Petrobras (Brazil); Pioneer Natural Resources (U.S.); Plains Exploration (U.S.); Shell (Netherlands); Sojitz Corp (Japan); TotalFinaElf (France);Walter Oil & Gas (U.S.).
Additionally, the following 25 companies have yet to produce on these 1998 and 1999 leases but will produce royalty-free energy in the future: Callon Petroleum (U.S.); Cobalt International Energy (U.S. firms Carlyle/Riverstone and Goldman Sachs are equity partners); El Paso Corp (U.S.); Energy Partners Ltd. (U.S.); Helix Energy Solutions (U.S.); Energy XXI (U.S.); EOG Resources (U.S.); ExxonMobil (U.S.); Helis Oil & Gas, Houston Energy and Ridgewood Energy (U.S.); Hess Corp (U.S.); Maersk Oil (Denmark); Mitsui (Japan); Murphy Oil (U.S); Noble Energy, Inc./Samson Investment Co. (U.S); Petsec Energy Ltd.(Australia); Repsol (Spain); Revus Energy (Norway); Red Willow Production (U.S.); Statoil (Norway); Stephens Production Co. (U.S.); Tana Exploration (U.S.); Teikoku Oil (Japan); Transocean (U.S.); W & T Offshore (U.S.); Woodside Energy (U.S.).
We need to make sure Congress doesn’t cave in to Bush and his cronies in big oil. This can be taken up next year in the 111th Congress when [hopefully] the Democrats have a larger majority in both Houses.
Please contact both the Senate and the House. Remember, our voices are never stronger than in the weeks before an election. Handwritten letters work best.
Peace