Yayyy for the Bush-ites! Those poor, poor lil oil companies have advocates (Diamond Dick Cheney, for one) in the White House who are helping the near-bankrupt oil companies screw the U.S. taxpayer. Oh wait, I'm a taxpayer. And wait, why do oil companies need financial assistance from a near bankrupt U.S. Treasury?
NYT: Oil Company Revives Suit on Avoidance of Royalties
The lawsuit could allow energy companies to avoid as much as $60 billion in royalties to the government over the next two decades.Anadarko Petroleum, based in Houston, is suing the Interior Department to overturn regulations that force companies that drill in publicly owned waters to pay full royalties on oil and gas they produce during times of high energy prices.
Anadarko, which earned $4.8 billion in profit last year on sales of $10.2 billion, is arguing that Congress guaranteed oil companies a special incentive for drilling in deep water under which the companies could avoid paying the standard royalty on much of what they produced in the Gulf of Mexico. The Interior Department has adamantly argued that the incentives were never supposed to apply when oil prices climbed above about $34 a barrel.
The suit itself was filed a year ago by the Kerr-McGee Oil and Gas Corporation, which Anadarko acquired last year for $21 billion. But Anadarko put the suit on hold last year and began court-supervised mediation talks with the Interior Department.
On Thursday, a federal judge in Louisiana, Patricia Minaldi, declared that the mediation talks had failed and ordered both sides to start filing arguments in late May. The failure of the mediation poses a major problem for the Bush administration, which is already trying to prevent the loss of $10 billion in royalties as a result of a huge leasing error made during the Clinton administration.
If Anadarko is successful, the government would lose many more times that. The Government Accountability Office, the Congressional watchdog agency, estimated in January that the government would lose about $60 billion over 25 years.
The federal government leases millions of acres in the Gulf of Mexico to oil and gas producers. Companies are required to pay a royalty of 12 to 16 percent of their sales from the leases, but the government also offers royalty holidays as an incentive for deepwater drilling....
The revival of the lawsuit could cause political problems for the oil industry, increasing hostility among Democratic leaders already angry about high energy prices and record industry profits.
In January, House Democrats overwhelmingly passed a bill that would revoke $7.6 billion in tax breaks for oil companies and would impose a stiff additional fee on all companies that refused to renegotiate the flawed leases signed during the Clinton years.
Tags: Bush_donor, /Energy, /Oil
From 1995-2000, the government tried to encourage oil exploration of deep-water sites, by incentivizing the HUGE amount of money it takes to drill in deep-water, versus land-based rigs. Notice the time frame. Who was President?
The US MMS signed the agreement, and did not include any EXTRA taxation above a set dollar/barrel. If they did, the companies would say, "it costs us $15 (deep water) versus $5/barrel (land)and you want to tax us for greater than (enter amount). No thanks."
Algeria is trying to do this and we get angry with them for renegotiating their contracts, on the fly. The U.S. tries to do this, and it's appropriate?
Profits are obscene? Have you seen the stock prices of oil companies lately? I've been told we live in a capitalist country. Aren't they supposed to make money for their shareholders? They aren't a privately held company. You don't like it? Invest in them. And do a little research into the industry before you write about them.
So BxC - why should oil companies need to rely upon government handouts if they are such worthy stock investments? I've got no beef with capitalism, I do think your energy company employers ought to be self-sufficient, and pay their own expenses and not rely upon corporate welfare.