Friday, February 29, 2008

"Going After" the Oil Companies

Earlier this week the Wall Street Journal reported that House and Senate Democrats were "going after" U.S. petroleum companies.

As early as today, the House of Representatives is expected to approve a measure that would eliminate roughly $18 billion in tax incentives for oil and gas companies, and use the savings to fund tax credits and other incentives for renewable energy.

It isn't expected to become law, but it is one of several recent attempts by Democrats to keep President Bush and Republicans on the defensive.The measure comes as high energy prices put increased pressure on consumers. ...

Senate Democrats also held a hearing yesterday to put new pressure on the administration to take a tougher line against the industry in a dispute over royalties for leases issued in the late 1990s. Assistant Secretary of the Interior Stephen Allred told a Senate Appropriations subcommittee that as much as $31 billion is at stake in the dispute, which centers on leases issued to oil and gas companies for the right to drill in the Gulf of Mexico from 1996 to 2000.

The House bill, though facing an uncertain future in the Senate and an almost certain veto from President Bush, is pretty good. From another WSJ piece:

The House of Representatives voted to repeal $18 billion of tax breaks for oil and gas producers, and to use the savings to finance tax incentives for wind-power projects, solar panels and more energy-efficient cars. ...

Under the bill, Congress would extend through 2011 tax credits for newly built wind farms and other facilities that generate power from renewable sources such as landfills. The government estimates the cost at $6.6 billion over 10 years, making it the single most expensive tax break in the legislation. Congress would also extend, through 2016, the tax credit of 30% that companies may claim for investments in solar products and so-called fuel cells. Fuel cells convert fuel into electrical energy without any combustion, thereby minimizing pollution.

Consumers would gain new tax breaks for buying plug-in hybrid cars.

Oil and gas companies would lose some $13.6 billion in tax breaks granted in 2004 for domestically produced goods. Exxon Mobil Corp., Chevron Corp., ConocoPhillips, Royal Dutch Shell PLC and BP PLC would lose the tax breaks entirely. The deduction would be frozen at 6% for smaller oil and gas companies. That deduction had been scheduled to jump to 9% in 2010.

Oil companies would also lose another $4.1 billion under provisions that provide less-favorable tax treatment for certain kinds of foreign income.

And how is the Senate "going after" the oil companies? Well, aside from the fact that very similar legislation failed BY ONE VOTE last year, Senator Feinstein is trying to get them to pay for petroleum they've already taken from public lands -- $31 billion worth:

A U.S. Interior Department official said today that the government may have a hard time collecting as much as $31 billion in royalty payments for leases issued in the late 1990s unless a court decision that rejected the government's right to the payments is reversed.

The warning from Assistant Secretary Stephen Allred came at a hearing aimed at keeping visibility on disputed royalty payments for deepwater drilling. Sen. Dianne Feinstein, D-Calif., has been pressing oil companies to make the payments, and promised to try again with legislation that would ban oil companies from participating in sales of new leases unless they pay royalties on a set of leases issued in 1998 and 1999.

That's not even mentioning the $10 billion the oil companies are shorting the American taxpayer because they're still paying royalties for the oil they take from public lands at a rate of $36/barrel. It's all pretty unbelievable to me, but I'm glad that our Democratic Represenatives and Senators are trying to do something about the endless boondoggles and ripoffs the Bush administration and oil companies have colluded to perpetrate against the American taxpayer. Next question -- why aren't we hearing more about this from the Democratic presidential candidates?

I've got a theory on that, and I'll be posting about it next week.

In the meantime -- remember that one vote that prevented the legislation to redirect oil company tax breaks to renewable energy from passing in the Senate last year? Well it belonged to John McCain who didn't even bother to vote, choosing instead to kill the bill quietly and without getting his fingerprints on it.

Monday, February 4, 2008

A New Fox in the Henhouse

Big Oil advocate and Baker Botts attorney, Gregory Copeland has just been nominated to serve as General Counsel for the Department of Energy. A brief look at his bio on the Baker Botts web site confirms that he has spent his career defending the interests of Big Oil. You'll note his representation of Marathon Oil in multiple cases.

It's ironic that, having defended Marathon against charges that they systematically underpaid royalties owed to the Department of Interior/Minerals Management Service (MMS), he is now seen fit by George Bush to perform "public service".

Iowa Congressman Bruce Braley spoke out about the cozy connections between the oil companies and those government officials who are supposed to enforce the laws and ensure oil companies pay for drilling on public lands:

“Unfortunately, evidence suggests that the cozy relationships between MMS officials and oil and gas companies have allowed these companies to underreport the resources they remove from federal lands and underpay the royalties they owe to the federal government. Evidence that MMS has failed to detect and pursue these violations by oil and gas companies is especially troubling as gas prices continue to rise, corporations make record profits and average American are struggling to fill their gas tanks and make ends meet.”

Not to mention that the "cost" our government charges the oil companies for oil taken from public lands is far from the true cost of that oil, as Darksyde wrote on DailyKos:

What is the true cost of a barrel of oil or a tank of gas for US consumers? Difficult to say. But any holistic number would have to partially factor in the damage done to local and regional water tables from refineries and storage facilities, the gigatons of greenhouse gases and other pollutants released, and the hundreds of billions of tax payer dollars and thousands of lives spent in Iraq and elsewhere in the Middle East to secure cheap oil. Adding insult to injury, consider the lavish tax breaks and sweetheart subsidies the oil industry and Exxon specifically have received from the Bush-Cheney administration courtesy of We the People.

When the U.S. Government prices oil for sale it's already dramatically undervalued, making the systemic failure to collect what the oil companies owe doubly bad. Bringing another big oil company lawyer to the table -- to represent "We the People" of all things -- is certainly not going to tip the scales to the side of justice.

And in case you forgot, Copeland's firm, Baker Botts, are the people who represented Bush in Bush v Gore, the case that stole the Presidency from the American people.