{"id":519169,"date":"2010-04-07T08:43:46","date_gmt":"2010-04-07T12:43:46","guid":{"rendered":"tag:www.southernstudies.org,2010:\/\/5.12214"},"modified":"2010-04-07T09:03:17","modified_gmt":"2010-04-07T13:03:17","slug":"profit-baby-profit","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/519169","title":{"rendered":"Profit, Baby, Profit"},"content":{"rendered":"

\"offshorerig2.jpg\"<\/a><\/span>President Obama’s drill-baby-drill (but not quite everywhere) gambit
\ndoes not only link him to an environmentally backward policy. It also
\nwill force his Administration to defend one of the most dysfunctional<\/a>
\n federal programs in modern history: the Interior Department’s offshore
\noil and gas leasing system.<\/p>\n

Interior’s Minerals Management Service (MMS) is supposed to collect
\nroyalties from companies drilling in offshore public waters. After new
\nactivity was restricted in the wake of the devastating spill off the
\ncoast of Santa Barbara, California in 1969, the oil industry sought to
\nmake its leases more profitable by pressing for reductions in these
\npayments.<\/p>\n

In the mid-1990s, when energy prices were low, Big Oil got Congress
\nto expand the “royalty relief” provisions that were already in the Outer
\n Continental Shelf Lands Act of 1953. Royalties were supposed to return
\nto higher rates when prices rebounded, but things got complicated.
\nFirst, it came to light<\/a> that MMS had failed to write those
\nprovisions into some 1,000 deepwater leases it signed in 1998 and 1999,
\nputting into question its ability to collect billions of dollars in back
\n royalties.<\/p>\n

While this was being sorted out, one of the drilling companies —
\nKerr-McGee (now part of Anadarko Petroleum) — filed suit challenging the
\n right of MMS to impose the higher royalties on any leases. The
\ncompany’s self-serving arguments found a sympathetic ear in federal
\ncourt. Last fall the Supreme Court declined<\/a> to review an appellate ruling in favor of
\nthe company, thus allowing Anadarko to avoid paying more than $350
\nmillion in back royalties. For the industry as a whole, the Court
\nblocked the Interior Department from trying to collect on a bill that
\nthe Government Accountability Office once estimated<\/a>
\n could run as high as $53 billion.<\/p>\n

Then there’s the small matter of the wild parties and gifts that
\nindustry representatives lavished on MMS employees in charge of the
\nagency’s royalty-in-kind program. In September 2008 Interior Department
\nInspector General Earl Devaney (now in charge of the Recovery
\nAccountability and Transparency Board) issued three reports<\/a> describing gross misconduct at MMS,
\nincluding cases in which agency employees were literally
\n in bed<\/a> with the industry. Devaney concluded<\/a> that the royalty program was mired in “a
\nculture of ethical failure.”<\/p>\n

Not all MMS employees were bought off. Some agency auditors came
\nforward and charged<\/a> that they had been pressured by their
\nsuperiors to terminate investigations of royalty underpayments.<\/p>\n

Once the Obama Administration took office, Interior Secretary Ken
\nSalazar took steps to clean up MMS. Last September he announced<\/a> plans to terminate the royalty-in-kind
\nprogram, whose staffers had been at the center of the sex and gifts
\nscandal.<\/p>\n

For a while it was unclear whether Salazar would tighten up the
\nremaining royalty programs. In fact, he told<\/a> the editorial board of the Houston
\nChronicle<\/em> last fall that in some cases he thought drilling
\ncompanies should pay even lower royalty rates. He changed his tune this
\nyear, and the Administration is seeking modest increases<\/a> in royalties and fees.<\/p>\n

Yet the entire offshore leasing program still amounts to a giant
\nboondoggle. Thanks to the federal courts, artificially low royalty rates
\n are now effectively an entitlement for the drilling industry. Research<\/a> conducted by the Interior Department
\nitself suggested that the incentives result in little additional oil
\nproduction. Not to mention the environmental risks.<\/p>\n

And now, thanks to a dubious calculation that making concessions on
\noffshore drilling will help prospects for a climate bill, the Obama
\nAdministration is bringing about a major expansion of a program that is
\ndisastrous even if there are no spills. Profit, baby, profit.<\/p>\n

(Photo of offshore oil drilling
\nplatform from the National
\n Energy Technology Laboratory<\/a>.)<\/i><\/font><\/p>\n

<\/div>\n","protected":false},"excerpt":{"rendered":"

President Obama’s drill-baby-drill (but not quite everywhere) gambit does not only link him to an environmentally backward policy. It also will force his Administration to defend one of the most dysfunctional federal programs in modern history: the Interior Department’s offshore oil and gas leasing system. Interior’s Minerals Management Service (MMS) is supposed to collect royalties […]<\/p>\n","protected":false},"author":4533,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-519169","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519169","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/4533"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=519169"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/519169\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=519169"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=519169"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=519169"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}