Monday, March 27, 2006

Today's Civics Lesson: Giving Away Oil Reserves

Okay, here's today's civics lesson:
If you're helping oil companies screw the federal government, do you:
(a) Lie about it.
(b) Make the matter so complicated that no one but the oil company lawyers and accountants understand how it works.
(c) Rely on bureaucrats to make things worse.
(d) Explain how it's in our best interest.
(e) All of the above.
The answer is (e).
Confused? Did you read your homework? The New York Times reports on how oil and gas companies have managed to tap vast reserves in the Gulf of Mexico without paying royalties.
Let's start with answer (a).
"There is no cost," declared Representative Joe L. Barton, a Texas Republican who was presiding over Congressional negotiations on the sprawling energy bill last July.
As we now know, the total is more like $5 billion in royalty payments our federal government has given away. But this giveaway didn't start with last year's energy monstrosity.
Which brings us to answer (b). Even the congressman who first wrote the provision into law doesn't understand it:
The program's original architect said he was surprised by what had happened. "The one thing I can tell you is that this is not what we intended," said J. Bennett Johnston, a former Democratic senator from Louisiana who had pushed for the original incentives that Congress passed in 1995.
As for answer (c), the Times describes how, in 1998 and 1999, bureaucrats neglected to include any provisions for a threshold price above which the incentives wouldn't apply. Whoops.
And answer (d): When BushCo took power, the threshold was raised to a level that allowed oil and gas companies to escape paying royalties even at last year's prices. Interior Secretary Gale Norton expained how this is actually in our benefit:
"These incentives will help ensure we have a reliable supply of natural gas in the future," Ms. Norton proclaimed, predicting that American consumers would save "an estimated $570 million a year" in lower fuel prices.
So there we are class; the answer is (e), "All of the above."
Now does it make sense? Good. So could one of
you explain it to Rep. Edward Markey (Dem.-Mass.), who still doesn't get it?
"Taxpayers are being asked to provide huge subsidies to oil companies to produce oil — it's like subsidizing a fish to swim."


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