The General Accountability Office released a report on June 5, 2008
that computed that the US Treasury may have to forgo oil royalty
payments in excess of $53 Billion over the next 25 years because of an
error made by the Interior Department. This forgone money is not
uncollected taxes, it is the government’s (taxpayers’s) share of the
revenue produced by selling oil that originated from reservoirs under
publicly owned sea beds.
Democratic Congressman Ed Markey calls the losses “unconscionable.”
Ed Markey: When Americans pull up to the pump, Big Oil is reaching into one pocket for gas money and into the other pocket for tax dollars that allow them to drill for free on public land.
• Several oil companies have renegotiated the terms of the flawed leases, but the industry’s main trade group today defended the Royalty Relief Act as important to increase production and national security.the Minerals Management Service, which runs the program, has been too cozy with the oil industry and has failed to protect the public interest. In addition, it reports that the RIK Program mademodifications to bid contracts “that appeared to inappropriately benefit oil companies.”
• “senior government officials had been steering huge oil-trading
contracts to favored companies.” Four of those employees were
re-assigned or have since left the MMS, notably the program’s head Greg Smith.
Smith appears to have been given a highly desirable early retirement
package, prompting House Committee on Natural Resources Chairman Nick
Rahall to cry foul, saying: “this Administration uses retirement like
some perverse witness protection program.”
• The reports describe a fraternity house atmosphere inside the Denver
Minerals Management Service office responsible for marketing oil and
natural gas that energy companies barter to the government in lieu of
cash royalty payments for drilling on federal lands.
• Employees frequently consumed alcohol at industry functions, had used
cocaine and marijuana, and had sexual relationships with oil and gas
company representatives,” the report said. Two government employees who
had to spend the night after a daytime industry function because they
were too intoxicated to drive home were commonly referred to by energy
traders as the “MMS Chicks.”
• Between 2002 and 2006, nearly a third of the 55-person staff in the
Denver office received gifts and gratuities from oil and gas companies,
including Chevron Corp., Shell, Hess Corp. and Denver-based
Gary-Williams Energy Corp., the investigators found. Two oil marketers
received gifts and gratuities on at least 135 occasions. One admitted
having a one-night-stand with a Shell employee. That same individual
allegedly passed out business cards for her sex toy business at work,
bragging that her income from that business exceeded her salary at the
Not a shot fired, the corporate city state take over of the United States. My favorite quote is the new right wing “National security” mantra/tag :“industry’s main trade group today defended the Royalty Relief Act as important to increase production and national security.”
FOR MORE INFORMATION
- “Interior Dept Auditors Rebel: More Docs,” POGO Blog, September 21, 2006.
- House Natural Resources Committee, Full Committee Legislative Hearing: “Energy Policy Reform and Revitalization Act of 2007,” May 23, 2007.
- POGO’s Oil and Gas Royalties Investigation Archive
- Minerals Management Service Royalty-In-Kind Program
- Criminal Inquiries Look at U.S. Oil-Gas Unit, New York Times, December 15, 2006
- Office of Personnel Management “Eligibility for Retirement Benefits”