Alleged deficit hawks surrender billions in revenue to oil companies

[Donnachaidh]

http://www.dailykos.com/story/2011/02/24/948473/-Alleged-deficit-hawks-surrender-billions-in-revenue-to-oil-companies?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+dailykos%2Findex+%28Daily+Kos%29&utm_content=Twitter

Republicans as well as some what-can-they-possibly-be-thinking Democrats keep explaining how the government needs to pinch its pennies, even if that means cutting Head Start and other programs designed to help Americans not counted among the nation's elite. But on Friday, the House of Representatives voted 251-174 against an amendment that would fix a flaw in deep-water oil leases on public land and increase royalty payments to the government. The failed amendment to the 2011 fiscal year spending bill was authored by Rep. Ed Markey (MA-07).

In 1995, the Republican-controlled Congress put into place a deal that oil companies would not have to pay royalties for oil recovered from off-shore wells drilled in deep water. The idea at the time, when oil was considerably cheaper than today, was that eliminating royalties would encourage companies to drill in places they would otherwise avoid because costs were too high for the benefit gained. Congress took the view that anything should be done to maintain our addiction to fossil fuel.

Many deep-water leases entered into between 1996 and 2000 still contain the royalty waivers. But, as oil prices have risen significantly in subsequent years, such drilling is now commercially attractive even without royalty-free arrangements. The 24 companies involved have thus gained windfall profits. Indeed, this year alone, they'll be raking in a handsome $1.5 billion extra as a result of waivers. A couple of years ago, it was only $1.3 billion. And the Government Accountability Office says the cost to the taxpayers over the next 25 years will be $53 billion. How many high-speed rail lines would that build?

Markey's amendment would have imposed nothing radical. He just wanted the deep-water drillers to pay the standard royalty rate, the same rate they and other companies pay on oil from leases not covered by the waiver. But that, it seems, would be draconian in the view of the majority of Representatives.

More at the link --