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Tuesday, July 13, 2010
Big Oil - Why Do We Give So Much to Big Oil?
The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.
It's one of the greatest train robberies in the history of the world. It's the gift that keeps on giving.
New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.
This year the oil companies will pump about $15 billion worth of oil out of federal territory this year and will pay no royalties to the government. BP gets to write off 70% of the rental fee for the Deepwater Horizon rig (which was registered in the Marshall Islands, in order to duck most US taxes) – just one of many tax breaks we give Big Oil. Maybe if we took away the tax breaks and insisted on royalty payments, the oil companies might be a tad more careful with the stuff.
Moreover, the projected largess could be just the start. Last week, Kerr-McGee Exploration and Development, a major industry player, began a brash but utterly serious court challenge that could, if it succeeds, cost the government another $28 billion in royalties over the next five years.
In what administration officials and industry executives alike view as a major test case, Kerr-McGee told the Interior Department last week that it planned to challenge one of the government's biggest limitations on royalty relief if it could not work out an acceptable deal in its favor. If Kerr-McGee is successful, administration projections indicate that about 80 percent of all oil and gas from federal waters in the Gulf of Mexico would be royalty-free.