OpenCongress Blog

Blog Feed Comments Feed More RSS Feeds

A Bureaucratic Error in Big Oil's Favor

August 4, 2008 - by Donny Shaw

At Public Citizen’s CitizenVox blog, Tyson Slocum reminds us of the oil company tax loophole that Congress should fix before they consider opening more publicly owned areas to drilling.

>Because of a bureaucratic oversight by the Department of Interior during the implementation of the [Deep Water Royalty Relief Act of 1995], oil companies that secured leases in 1998 and 1999 were exempted from 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. 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.

Fixing this accidental loophole, which the Government Accountability Office estimates will cost the government a total of $14.7 billion, has been a goal of Democratic congressional leaders since taking control of Congress. Upon taking office in January 2007, the House voted to bar companies from new leases unless they agree to renegotiate the 1998-99 contracts as part of their comprehensive energy bill. But that provision was removed from the bill by the Senate before it was signed into law.

Correcting these leases and recovering the money that they have cost taxpayers seems like good compromise material for Democrats looking to work out a deal on expanded drilling.

Like this post? Stay in touch by following us on Twitter, joining us on Facebook, or by Subscribing with RSS.


  • Anonymous 08/05/2008 7:41am

    I am sure our wonderful oil companies shared their wealthy lease windfall with significant contributuins to Republican campaign funds to keep their “accidental loophole” rolling along. These thieves ought to be in jail!

  • Anonymous 08/05/2008 1:43pm

    Another curious aspect regarding the oil issue. If oil has peaked and from now on it will be in decline, why is no one aggressively seeking the hidden patents owned by oil companies which would boost efficiency and mileage of our automobiles? Why are plastic garbage bags yet in use when oil is used to produce these conveniences? And if it’s true that in ten years there will be total break down of society due to nothing to replace oil use on a large scale(to ship food and other goods, to run factories and businesses, to heat homes, and transport everything needed to live), why is there no serious discourse about using the tucked away patents, why are oil companies allowed to steal the oil from American lands without paying royalties. Why do Americans pay through the nose at the pumps when it was government land where no royalty was paid? I read a magazine article yesterday that did a feature on President and Laura Bush’s home in Texas. They stated that this Texas Oilman, Pres. Bush, had his house designed to be totally off the grid! Yet, a person without the means to pay for going off the grid is stuck and will be stuck with no power when this fiasco shakes out down the road. Perhaps this is just one reason why Americans believe nothing that comes from their own government. There is no real reason to think that we have a government run by people looking out for our best interests. And Americans aren’t dumb, befuddled sheep! They have had their voices silenced because there is no access to mainstream media, there is no place to gather and have our ideas heard. Those in charge slowly but ever so surely made sure of it. This Congress, This Senate, This Judiciary, This President, swore an oath to the Constitution of The United States and to the People who should be in charge but their authority has been hijacked.

Due to the archiving of this blog, comment posting has been disabled.