Oil and gas royalties have been all the news this week. First, the coveted Pulitzer Prize for public service went to a small Virginia paper, the Bristol Herald Courier. It’s the sort of story which reminds us why it is essential that small local newspapers not go the way of the dodo. Its eight-segment series dissected a rural Virginia nightmare, where farmers and landowners had their land leased out from under them by the state, and then did not even receive the royalties for the gas taken. Royalties stuck in escrow amount to more than $24 million (not counting the money that was wasted, lost during the crash, or mismanaged by the bank ostensibly overseeing it.)
Also this past weekend, the New York Times offered an editorial about how US taxpayers receive no royalties for some of the oil taken from (US waters) in the Gulf of Mexico. Rep. Ed Markey of Massachusetts has offered a bill that every taxpayer should support: to make oil companies profiting from leases signed during the 1990s oil bust now pay the royalties once waived to promote exploration and drilling.
Oil then was $28 a barrel; it’s now $80 a barrel. The need for incentives is long over. According to the Bureau of Land Management, which oversees oil and gas leasing on public lands, federally reported the sales value of the oil and gas (and many mining commodities which are included in the charts) extracted in 2009 was $18,506,539,592.42. The government collected only $2,689,982,674.48 in royalties. We need more.
Personally, I fully understand supporting free enterprise, but I don’t support free rides. Even internationally, in all but the worst leases signed by the most naïve governments, developing countries receive a much larger percentage of the take than the US does. (Don’t forget that recently in Iraq many of these same companies were willing to invest billions in a precarious security and legal situation for the right to earn $2 a barrel for oil.)
The US should not be intimidated by the oil and gas companies. If they will work in some of the roughest and least developed countries in the world, they will work in the safe and supportive USA.
To read the article on the Virginia landowners, how they were bilked, and their efforts to get the money coming to them, go to the Pulitzer articles at: http://www2.tricities.com/tri/special_sections/mineral_rights/ .
