Oil companies not paying royalties

Scott Tong Sep 13, 2006
HTML EMBED:
COPY

Oil companies not paying royalties

Scott Tong Sep 13, 2006
HTML EMBED:
COPY

TEXT OF STORY

BRIAN WATT: Oil companies seem to keep slipping through the fingers the Interior Department. Its job is to collect royalties from them, and it’s struggling when it comes to certain oil deals made in the past. And now comes word the problem still may not be fixed for current agreements. It’s the topic of a congressional hearing today. Marketplace’s Scott Tong reports.


SCOTT TONG: When oil prices are low, Uncle Sam cuts energy companies a break. They’re excused from paying royalties to the government.

That incentive is meant to expire when prices rise.

But the Interior Department left out the expiration part in key contracts in the ’90s and that shortchanged the Feds by some $10 billion.

Today’s hearing will focus on an in-house audit at Interior, and whether the department is still giving industry friendly deals today.

Erich Pica is with Friends of the Earth.

ERICH PICA: What we’ve seen over the last 10 years or more is this culture of incompetence or a culture of coziness with the oil companies. And they’re not monitoring royalty payments that these companies have to pay for the oil they drill on public lands.

The New York Times reports that royalty waivers may still be part of brand new contracts even though a barrel of crude goes for $60 plus.

In Washington I’m Scott Tong for Marketplace.

There’s a lot happening in the world.  Through it all, Marketplace is here for you. 

You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible. 

Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.  

Need some Econ 101?

Our new Marketplace Crash Course is here to help. Sign-up for free, learn at your own pace.