UNFAIR OIL

Oil companies' impunity at this time in history makes me angry. Like big tobacco, they should be paying more, not less, for the impact their product is causing. And they shouldn't be reaping huge profits at buyers' expense! The admin is so pro-oil right now. It's a cabal.

Sign petition to end oil companies' unfair profits: http://www.democracyinaction.org/dia/organizationsORG/foe/petition.jsp?petition_KEY=340


Big Oil's Royalty Rip Off Costs Billions
As you fill your tank today at $3.00-and-counting per gallon or contemplate this coming winter’s heating bills, consider this: Big Oil is making even more money than you know. Not just from the obscenely high price of gasoline, but from an obscure but highly lucrative practice called "royalty relief."
Royalties are the fees oil companies pay on the oil and natural gas they extract from publicly-owned lands and offshore areas (at least 25 percent of all oil and gas produced in the U.S. comes from these areas). They typically range from 12 to 16 percent of the revenue the oil companies generate and are used to fund federal programs that support historic preservation, recreation and natural resource conservation; the treasuries of the oil-producing states; and the federal Treasury.
When prices hit an all-time low in 1995, oil and gas companies—seeking to limit their financial exposure—cut back on exploration. In response, Congress passed the Deep Water Royalty Relief Act, which relieved companies of their obligation to pay royalties on offshore drilling leases sold between 1996 and 2000. But the royalty relief was not limitless. It was pegged to specific price thresholds: when oil and gas prices rose above a pre-set amount—$35 a barrel for oil and $4 per thousand cubic feet of natural gas—companies would again pay royalties.
In 1998 and 1999, the Interior Department awarded leases that did not include these price triggers. These leases are now coming due and the cost to taxpayers—and benefit to the oil companies—is staggering. It is estimated that within the next five years, they will yield $65 billion in royalty-free earnings. [1] The Government Accountability Office (GAO) estimates that over the next ten years, taxpayers will lose out on $10 billion in royalty payments. [2]
\nAnd it gets worse. In what is being called a test case, Kerr-McGee is suing the Interior Department under the Deepwater Royalty Relief Act, challenging limits placed on royalty relief pursuant to the law in leases awarded in 1996, 1997 and 2000. Should the company prevail, the GAO estimates that this precedent would cost taxpayers an additional $60 billion over the next 25 years.\nCongressional opposition to this unlimited royalty relief is bi-partisan and growing—no doubt in response to constituent complaints. This May, the House of Representatives passed an amendment to the FY 2007 Interior appropriations bill offered by Rep. Maurice Hinchey (D-NY) that would encourage oil companies to renegotiate past leases and begin paying royalties by preventing them from bidding on future leases if they don’t. The Senate Appropriations Committee followed suit in July, passing a similar amendment offered by Sens. Dianne Feinstein (D-CA) and Judd Gregg (R-NH). At the same time, a key House subcommittee chaired by Rep. Darrell Issa (R-CA) has held a series of hearings to ascertain why the 1998 and 1999 leases omitted price thresholds in the first place.\nThese efforts appear to be paying off. In recent weeks companies including Shell Oil have indicated a willingness to renegotiate leases and begin paying royalties, and Kerr-McGee announced plans to temporarily back off their lawsuit, seeking mediation instead. \nTake Action:",1]
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And it gets worse. In what is being called a test case, Kerr-McGee is suing the Interior Department under the Deepwater Royalty Relief Act, challenging limits placed on royalty relief pursuant to the law in leases awarded in 1996, 1997 and 2000. Should the company prevail, the GAO estimates that this precedent would cost taxpayers an additional $60 billion over the next 25 years.
Congressional opposition to this unlimited royalty relief is bi-partisan and growing—no doubt in response to constituent complaints. This May, the House of Representatives passed an amendment to the FY 2007 Interior appropriations bill offered by Rep. Maurice Hinchey (D-NY) that would encourage oil companies to renegotiate past leases and begin paying royalties by preventing them from bidding on future leases if they don’t. The Senate Appropriations Committee followed suit in July, passing a similar amendment offered by Sens. Dianne Feinstein (D-CA) and Judd Gregg (R-NH). At the same time, a key House subcommittee chaired by Rep. Darrell Issa (R-CA) has held a series of hearings to ascertain why the 1998 and 1999 leases omitted price thresholds in the first place.
These efforts appear to be paying off. In recent weeks companies including Shell Oil have indicated a willingness to renegotiate leases and begin paying royalties, and Kerr-McGee announced plans to temporarily back off their lawsuit, seeking mediation instead.
Take Action:
Help end the oil royalty rip-off by signing Friends of the Earth’s petition calling on the oil companies to renegotiate their leases to pay royalties.\n///\nNotes:1. http://www.mms.gov/PDFs/2007Budget/FY2007BudgetJustification.pdf2. http://www.nytimes.com/packages/pdf/business/29lease.pdf\n \nPermanent link to this article\n\n\n",1]
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Help end the oil royalty rip-off by signing Friends of the Earth’s petition calling on the oil companies to renegotiate their leases to pay royalties.