Week of 6.16.06
This Week: Crude Awakening | Whistleblower: A Former Government Employee Speaks Out | FAQ: Oil and Gas Royalty Relief | Essay: Trivializing Corruption | Transcript
"These oil companies along with some members of Congress have really engineered one of the greatest train robberies of all time," says California Congressman George Miller.
You might not realize it, but American taxpayers own some very valuable property, some of it located in the deep waters of the Gulf of Mexico. If oil and gas companies want to drill on this territory they are required to lease it out from the U.S. government, which collects royalties from them on the taxpayers' behalf.
It's no paltry sum. Royalties from oil and gas exploration are the government's second largest source of revenue, behind income tax.
Program Resources» Video: Crude Awakening
- Interview: David Sirota
» Listen to this show [mp3]
"I think the American taxpayers are losing billions of dollars," Kevin Gambrell, former director of the Federal Indian Minerals Office in Farmington, New Mexico, told NOW.
Gambrell worked for seven years collecting royalties from petroleum companies working on federal and Native American lands in the Four Corners region.
"I think oil and gas companies were always trying to figure out how not to pay royalties or to pay as little as possible," Gambrell said.
He said he caught many oil and gas companies lying and cheating to avoid paying the full royalties owed. He adds that when he tried to go after a company for the royalties they owed, he received phone calls from Congressional offices leaning on him to side with industry.
The Royalty Treatment
Since then, a number of other royalty relief measures have been passed, such as the one included in the most recent energy bill, signed last summer, which increased the amount of oil that can be drilled without paying royalties.
Royalty relief under the 1995 act could cost taxpayers up to $80 billion over the next twenty-five years, depending upon the outcome of an industry lawsuit, according to a recent draft report by the Government Accountability Office. This includes a mistake by the government when drawing up some of the royalty agreements, which could cost $10 billion.
Who's following the money, and who's keeping it? Get ready for a crude awakening. Next time on NOW.
Statement by Walter Cruickshank, Deputy Director, Minerals Management Service, United States Department of the Interior, before the Committee on Government Reform, Subcommittee on Energy and Resources, United States House or Representatives, March 1, 2006. [Requires Adobe Reader]
Statement by the Kerr-McGee Corporation, an oil company that has sued the Bush administration to expand royalty relief. [Requires Adobe Reader]
Government Accountablity Office: Briefing on Oil and Gas Royalties, March 27, 2006 [Requires Adobe Reader]
Report of the National Energy Policy Development Group, May 2001 [3MB - Requires Adobe Reader]
Department of the Interior, Audit of the Minerals Management Service, March 2003 [2MB - Requires Adobe Reader]
NOW: Crude Behavior: An investigation on the oil industry
Find out the average price of gas in your locale by using the AAA's Fuel Gauge Report.
Also this week, a video interview and essay on big money and government by David Sirota and viewers respond to last week's program "Who Killed the Electric Car"