Did you know that oil and gas industry have extracted over 800 million barrels of oil (that’s over 25.2 trillion gallons) and trillions of cubic feet of natural gas from the US without paying any royalties, normally worth about $11 billion?
This week, Representative Ed Markey, the ranking member of the Natural Resources Committee in Congress and my US Representative, published the report Entitled Oil for Nothing… And Gas for Free. With the sequester scheduled to go into effect Friday, if Congress doesn’t do something to stop it, this is a no brainer as something we can change that would have a major positive impact to reducing the budget without sacrificing any programs that are keeping our economy growing.
In short, this loophole was created by the Outer Continental Shelf Deep Water Royalty Relief Act of 1995 (DWRRA) which was designed to keep it profitable for the fossil fuel industry to drill off shore when the price of oil was around $20 per barrel. The DWRRA had provision in it that should have stopped the royalty free nature when the price of oil was over $28 per barrel, but the oil industry has successfully sued to keep their royalty free stature even after oil peaked over $100 per barrel.
Here are a few highlights from the report and Markey’s press release:
“Gas prices are hitting record highs for this time of the year. Our nation is staring down the ‘sequester’ that will slash programs for the middle class and working poor. And yet this report shows that we are still squandering tens of billions of dollars in free drilling to companies like BP, Exxon and more than 100 other oil and gas companies,” said Rep. Markey, the top Democrat on the House Natural Resources Committee. “Oil companies and their allies in Congress can no longer defend these oil company windfalls that cheat our taxpayers, pollute our budget negotiations, and deprive Americans of real services.”
–The so-called ‘Big Five’ oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—have received more than $2.8 billion in royalty breaks from such leases, paying nothing for 262 million barrels of oil and 361 billion cubic feet of natural gas. Close to 100 smaller firms have avoided more than $8.1 billion in royalty payments for oil and gas produced under such leases.
–Up to 3.14 billion barrels of oil equivalent remain for the taking under royalty-free leases. The Big Five are sitting on more than half of this total, with 1.6 billion barrels of oil equivalent that they can extract without paying royalties.
–State-owned foreign firms fully or partially own almost 40 percent of active royalty-free leases and have extracted for free more than 65 million barrels of oil and more than 125 billion cubic feet of natural gas from American waters.
–Leading recipients of royalty breaks include Chevron, with $1.5 billion in avoided royalty payments; Anadarko Petroleum Corporation, with over $1 billion; BHP Billiton Petroleum, with almost $685 million; Hess Corporation, with more than $565 million; and Murphy Oil Corporation, with almost $400 million.
We need our elected officials to think more about our needs as individuals and as a country than how they are going to fund their next campaign. We need to repeal the DWRRA now and end the other subsidies to the fossil fuel industry as part of addressing our deficit now. Companies that are making billions in profits each year do not need these government handouts.
Happy Green Voting!
p.s. I hope that Representative Ed Markey will be elected as my next Senator from Massachusetts this summer in the special election to fill John Kerry’s seat.