Oil and gas companies set to receive $7 billion taxpayer windfall
To supplement their already record-breaking profits, oil companies are set to receive around $7 billion in royalty relief over the next five years — possibly up to $35 billion, depending on the outcome of an ongoing lawsuit — and the feds claim they are basically powerless to stop it. At issue are royalties charged for oil and gas extracted from federal land and deep waters off shore. Or in this case, not charged: In the mid-90s, oil was cheap and the feds were trying to sweeten the pot to encourage risky, high-cost exploration in the deep waters of the Gulf of Mexico, so they passed a “royalty relief” act that zeroed out royalties. Only now, oil and gas prices are up, oil companies are drowning in cash, and the taxpayer giveaway continues. The feds say the royalty-free bonanza is typically tied to price points for oil and gas, but a lawsuit by oil company Kerr-McGee, if successful, could remove even that modest limitation, jacking up the additional lost royalties to around $35 billion. Congressional Democrats are working to end the royalty relief, but their chances of success are slim.