The New York Times has a story on yet another report the government has kept under wraps for a substantial period of time (in this case over a year). The Interior Department has a study showing that "inducements" offered to oil companies
could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.
But the study predicts that the inducements would cause only a tiny increase in production even if they were offered without some of the limitations now in place.
It also suggests that the cost of that additional oil could be as much as $80 a barrel, far more than the government would have to pay if it simply bought the oil on its own.
The Interior Department disputes the findings of its own study, claiming that the costs of incentives is lower than the study found. But other experts told the NYT that the US
was much more generous to oil companies than most other countries, demanding a smaller share of revenues than others that let private companies drill on public lands and in public waters. In addition, they said, the United States has sweetened some of its incentives in recent years, while dozens of other countries demanded a bigger share of revenue.
Where other countries can get more than 70% - with an average of 60-65% - of oil revenues, the US gets about 40%, in part due to a series of loopholes and intentional giveaways. The story reports recent scaling back of some incentives and attempts to persuade oil companies to give up one major loophole (which they are of course universally thrilled to do), but other recent actions by both the executive branch and Congress have added incentives. Funny how these things come from the people who are so opposed to using one-tenth the money to help lift ordinary citizens out of poverty.
As the Democratic Congress looks for ways to dig the US out of the deficits produced by Bush and the Republican Congress, giveaways to oil companies seem like something that will deserve serious attention.