Louisiana sues feds over oil revenue

Hillary Wicai Jul 21, 2006

KAI RYSSDAL: The oil industry’s up to report profits next week. Which means we all ought to get set for some nine-digit numbers. But oil companies might be getting some pricing pressure. From the people with the oil. Marketplace’s Hillary Wicai explains who exactly that is.

HILLARY WICAI: Senator Ted Stevens lost his bid today to get Alaska even more oil royalties than it already receives. He tried to attach a measure onto a Senate bill. Gov. Kathleen Blanco of Louisiana is hoping for better luck. She filed suit yesterday against the federal government to stop the pending sale of offshore oil and gas leases. She also wants to increase her state’s cut. She argues Louisiana’s entitled to more of the federal drilling royalties generated off its coast. The states seem to have support from an unlikely source. John Felmy is with the trade association, the American Petroleum Institute.

JOHN FELMY: We think that the states clearly should be involved in terms of returns because they are the sites of the exploration and production activities. They’re bearing some of the costs of development.

Wait a minute. The oil industry wants to give states a greater share? Yup. Here’s why: The industry stands to win access to even more offshore drilling if an energy bill makes its way through Congress. It promises some reluctant coastal states a bigger cut if more offshore drilling is allowed. Sounds fair right? Unless you’re all the other noncoastal states.

KEVIN BOOK: The offshore profits for the federal government are divided among all the states equally.

Kevin Book is an energy analyst.

BOOK: And if give more of the proceeds to the coastal states, you must be taking it away from the inland states.

A taxpayers advocacy group says $69 billion lost in federal revenues over 15 years.

The bill is expected on the Senate floor next week.

In Washington, I’m Hillary Wicai for Marketplace.

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