Oil royalties slip-sliding away

Offshore oil and gas platforms in the Gulf of Mexico

TEXT OF STORY

BOB MOON: A federal trial kicks off in Denver today. At issue: Whether or not big oil companies slipped out of paying royalties on oil they drilled out of public land. It may have been an oversight by the overseers: Interior Department officials may not have looked carefully enough at their own contracts. Or did they? Marketplace's Jeff Tyler takes a look:


JEFF TYLER: The so-called loophole is really a bureaucratic mistake in some old leases for oil exploration in the Gulf of Mexico.

Congressional auditors estimate that the error could cost the federal government as much as $10 billion in lost revenues.

BETH DAILY: In addition to that problem, there's an uprising of auditors who are claiming that the agency is failing to collect on audit findings.

That's Beth Daily, with The Project on Government Oversight. She says Interior Department auditors have filed false claims lawsuits against companies for allegedly defrauding the government by underpaying royalties.

DAILY: These auditors felt it was the only thing left that they could do because their managers were refusing to collect the money that was owed by these oil companies.

The oil and gas companies are being sued — just not by the Feds.

Daily says that, over the past 15 years, states and private citizens have recovered around $11 billion related to underpaid royalties.

I'm Jeff Tyler for Marketplace.

About the author

Jeff Tyler is a reporter for Marketplace’s Los Angeles bureau, where he reports on issues related to immigration and Latin America.

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