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Oil Companies Benefit, Taxpayers Loose

OK folks, here's another reason to get mad at the big oil companies as you're already fuming from watching your gasoline bill skyrocket.

The federal government is allowing oil companies to get away with not paying royalties when they drill on federal land. So the government is loosing billions of dollars that could be put towards Medicare, Medicaid, education, and research for alternative energy sources, just to name a few.

The oil companies are currently being allowed to not pay these royalties when most objective observers feel they should. Certainly any US taxpayer would feel that way if they knew what was going on.

The royalties are a hang over from a bygone day when the government was trying to encourage drilling in the 90's. Oil was was cheap back then and the oil companies claimed they didn't have the profit to risk money looking for new wells.

To give the oil companies a break, the government waived the royalties. Now that the price of oil has shot through the roof, the government has not yet reinstated the royalties.

Currently about 25% of all American produced oil and gas comes from federally owned lands and waters in the Gulf of Mexico.

Both Republicans and Democrats are worried about the situation. "It's one of the greatest train robberies in the history of the world," said Democrat Representative George Miller.

"We need to remember the primary reason that incentives are given. It's not to make more money. It's to make more oil, more gas," said Johnnie Burton, the director of the federal Minerals Management Service. "Production of fuel for our nation is essential to our economy and essential to our people."

With oil companies reaping record profits, the government is finally beginning to demand the millions of dollars of royalties that have gone unpaid. The oil industry, however, is not going to give up without a fight. Kerr-McGee announced intentions to challenge the government's demands in court.

If the government looses its case, it will loose an estimated $35 billion due in royalties by the year 2011. Incidentally, this is the same amount Bush wants to cut from domestic programs over the same time period.

Submitted by:

Dave Larsen

Dave Larsen has worked for twenty-five plus years in the alternative energy business. Originally trained as an auto mechanic, Dave quit that profession because he got tired of shop owners ordering him to rip customers off. Dave now offers tips so people can save money on their fuel bills. Get his recommendations at http://www.energy-efficient-car.com


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