Oversight Catching Up on Big Oil

Oil companies must have seen the writing on the wall. House Speaker-elect Nancy Pelosi and other leading Democrats have publicly promised to pass legislation forcing Big Oil to pay up on federal leases in the Gulf of Mexico where they have been getting a free ride thanks to a mysterious foul up on contracts signed in 1998-99. Just today Pelosi talked about it at her press conference:

Q Madam Speaker-elect, you talked a lot about rolling back subsidies for Big Oil. Have you decided which subsidies you are going to roll back, and how much money is involved?

Ms. Pelosi. The biggest money maker there would be, as I said -- what we will do is roll back the subsidies to Big Oil and use the resources to invest in a reserve for research and alternative energy.

Q A lot of subsidies; have you decided?

Ms. Pelosi. Democrats believe, and we think that we can get some Republican support for the idea, and it has is passed this House; it came out of the Resources Committee, passed on the Floor of the House, that when oil reaches $40 a barrel, that that oil company should be paying a royalty to the federal government. That has again passed this House two times. That is one of the initiatives that brings tens of billions of dollars to the Congress. So that is the most, shall we say, useful to us in terms of the money that it produces. There are a couple others as well but that is the biggest one.

Today, nine months after the screw up on offshore leases was first revealed, the Department of Interior announced that it had reached agreements with some of oil companies. According to congressional staff, these companies represent only 17 percent of the 1998-99 leases in question. The announcement, though, was noticeably lacking in details, although it notes that the companies will start paying royalties on October 1, 2006. Representative Edward Markey, who has helped lead the charge on collecting the drilling fees, rained on the parade with his press release today revealing that the Department of Interior Inspector General has made two criminal referrals. POGO sources say that one of those referrals involves Interior�s royalty in kind program, a program much-beloved by the oil industry which has dramatically expanded under the Bush Administration. Today�s agreements are just the tip of the iceberg of billions of dollars the Department of Interior is allowing Big Oil to take out of the taxpayers� and Native Americans� pocket.

Still, Interior seems rather inert. In response to the findings of a scathing report released by the DOI Inspector General last week, the Minerals Management Service of Interior seemed unwilling to attempt to improve its tracking of oil and gas fee collections. Now they will have to answer for that to House Resources Committee Chair Nick Rahall who has pledged (pdf) to make oil and gas royalty collections one of two top oversight priorities for his committee and others.