It's good to run an oil company

[Spence]

Wheee -- free money!
The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.

New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.

Based on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.

Administration officials say that the benefits are dictated by laws and regulations that date back to 1996, when energy prices were relatively low and Congress wanted to encourage more exploration and drilling in the high-cost, high-risk deep waters of the Gulf of Mexico. Source (http://www.nytimes.com/2006/02/14/business/14oil.html?ei=5088&en=87dc413fa6add582&ex=1297573200&adxnnl=1&partner=rssnyt&emc=rss&adxnnlx=1139934143-T3HpocLd9NRxhl8yX6S/hg&pagewanted=print)

[VTBob]

I honestly lose more faith in the federal gov't more and more by the day with this kind of news...

[Ibleedburgundy]

I, for one, am proud to have an oil man in the White House.

[C-7]

I, for one, am proud to have an oil man in the White House.



An oil man invading other countries for oil.

[OCSkinzFan]

If there were a Demacratic White House, right now every right wing pundant would be shouting. Bush does it and ....

"crickets":banghead:

[OCSkinzFan]

I, for one, am proud to have an oil man in the White House.
Wasn't he the only oil man to ever loose money selling oil?

America should have seen the pattern.

[RedskinsDave]

the benefits are dictated by laws and regulations that date back to 1996

Facts suck.

[BurgundyNGold]

This is asinine. Forfeiting $7B in revenue as part of a "relief" effort sucks, but the government did make the rule. It was part of the former administration's energy policy, and I don't think it was a bad idea. It just turns out that the government lost their shirt on this one.

What would folks have the government do? Go back on their own agreement?

[BurgundyNGold]

I honestly lose more faith in the federal gov't more and more by the day with this kind of news...
I hate the oil companies too, but the way to bring things back into balance is not to go back on agreements and flout laws. It's to hold them accountable for their boons right now and collect all possible revenue from them as a result of their profits.

[BurgundyNGold]

I, for one, am proud to have an oil man in the White House.
Then you must be ecstatic that the Clinton admiistration made this deal.

[BurgundyNGold]

An oil man invading other countries for oil.
And not even doing that right. I think we were actually getting more barrels of oil per month from Iraq as part of the oil for food program than we are now. If oil was the ambition of the plan, it sounds like a crappy plan all the way around.

I don't personally think that the administration had a plan after "Step 1 - Topple Saddam Hussein". It's what is generally referred to as Underwear Gnome war planning. ;)

[CNYSkinFan]

Facts suck.

Saw that one coming from a mile away.

You will admit though Dave that the law was NEVER intended to be used in this way and that it is the current administration's fault that they never closed the loophole and in fact are making no moves towards doing so.

[BurgundyNGold]

Saw that one coming from a mile away.

You will admit though Dave that the law was NEVER intended to be used in this way and that it is the current administration's fault that they never closed the loophole and in fact are making no moves towards doing so.
So what loophole would it have? The fact that oil is up over $50/barrel? The law had high reward as a balance to the high risk prospects of drilling in the waters of the Gulf of Mexico. Neither an easy nor cheap task. Even if the intent was to spawn enery prospecting in the Gulf at $10/barrel, the government would stil be forfeiting $1.4B in royalties.

It sucks that the folks in government don't get the money, but they have about as much cause to whine about their own stupidity on this as the guy who sells a painting at a yard sale only to see it appraised at $400K on "Antique Roadshow" a week later.

[RedskinsDave]

Saw that one coming from a mile away.

You will admit though Dave that the law was NEVER intended to be used in this way and that it is the current administration's fault that they never closed the loophole and in fact are making no moves towards doing so.

Yeah, show me where that was even possible. Saw your defense of the folks who wrote the law coming too.

[CNYSkinFan]

Yeah, show me where that was even possible. Saw your defense of the folks who wrote the law coming too.
You mean the GOP led congrtess who passed the law? I think there is plenty of blame to go around on this one, including the oil companies, Clinton administration, and the GOP

[BurgundyNGold]

You mean the GOP led congrtess who passed the law? I think there is plenty of blame to go around on this one, including the oil companies, Clinton administration, and the GOP
I agree with you on this one. I would also say that this seems to be one of those extreme cases of bad luck for the government. They gambled and lost. Big time.

[CNYSkinFan]

So what loophole would it have? The fact that oil is up over $50/barrel? The law had high reward as a balance to the high risk prospects of drilling in the waters of the Gulf of Mexico. Neither an easy nor cheap task. Even if the intent was to spawn enery prospecting in the Gulf at $10/barrel, the government would stil be forfeiting $1.4B in royalties.

It sucks that the folks in government don't get the money, but they have about as much cause to whine about their own stupidity on this as the guy who sells a painting at a yard sale only to see it appraised at $400K on "Antique Roadshow" a week later.
I actually think this is yet another lesson in corporate welfare and why it should NOT be done. This is an eggregious case of course and not the norm, but it is indicative of a problem with long term windfalls from multi-billion dollar companies.

[RedskinsDave]

You mean the GOP led congrtess who passed the law? I think there is plenty of blame to go around on this one, including the oil companies, Clinton administration, and the GOP

You screwed up. Clearly you meant to put Clinton last in that sentence. :rolleyes:

[BurgundyNGold]

I actually think this is yet another lesson in corporate welfare and why it should NOT be done. This is an eggregious case of course and not the norm, but it is indicative of a problem with long term windfalls from multi-billion dollar companies.
I agree with this too. Conversely, more than a few people in government back in 1996 almost certainly popped the cork on a few bottles of champagne at their cunning, outside the box plan to spawn energy prospecting on the cheap for the Fed. Back then, it probably looked like a slam dunk for all parties -- why else would Clinton have signed a Rep bill?

Still, it seems that corporate welfare joined social welfare as a service of government long ago. The only minor difference between who benefits is who controls power in Washington.

[Spence]

This is asinine. Forfeiting $7B in revenue as part of a "relief" effort sucks, but the government did make the rule. It was part of the former administration's energy policy, and I don't think it was a bad idea. It just turns out that the government lost their shirt on this one.

What would folks have the government do? Go back on their own agreement?The rule can be rescinded at any time. Why is this rule still in existence, considering oil is over $50/barrel? Isn't anyone in the government paying attention to this stuff? Isn't anyone minding the store?

[Axegrinder]

I heard on tv that Kerr-Mcgee is in court now trying to get even more money on their deep sea drilling.

[BurgundyNGold]

The rule can be rescinded at any time. Why is this rule still in existence, considering oil is over $50/barrel? Isn't anyone in the government paying attention to this stuff? Isn't anyone minding the store?
Well, if the rule can be rescinded, then that's something to consider. I must've missed that in the article. If that can be done, then the question comes down as to whether or not Congress should ethically bail on their end of the deal by imposing new terms after the fact.

[Keino]

Facts suck.

Yea....Add some to the discussion then. The concessions were added to further exploration for the year 98 and 99 in Deeper waters of the Gulf of Mexico, when A Barrell of Oil was fetching $10 per. Now that they are Fecthing $70 per, I don't think the oil companies need the relief.

[BurgundyNGold]

Yea....Add some to the discussion then. The concessions were added to further exploration for the year 98 and 99 in Deeper waters of the Gulf of Mexico, when A Barrell of Oil was fetching $10 per. Now that they are Fecthing $70 per, I don't think the oil companies need the relief.
I wholeheartedly agree with your perspective on the "relief", but to be more accurate, oil was probably trading somewhere around $20-24/bbl in '98, '99 and is currently around $60/bbl. There is, however, the ethical question of whether it's OK for the government to make a deal and then change it midstream. It's a sticky situation.

[RedskinsDave]

Yea....Add some to the discussion then. The concessions were added to further exploration for the year 98 and 99 in Deeper waters of the Gulf of Mexico, when A Barrell of Oil was fetching $10 per. Now that they are Fecthing $70 per, I don't think the oil companies need the relief.

I did. I pointed out who was in charge when the relief was set. I don't think the oil companies need any remote relief and I think that this rule should be done away with. I also think people need to look before they jump in and start blaming people too.

[RedskinsDave]

I wholeheartedly agree with your perspective on the "relief", but to be more accurate, oil was probably trading somewhere around $20-24/bbl in '98, '99 and is currently around $60/bbl. There is, however, the ethical question of whether it's OK for the government to make a deal and then change it midstream. It's a sticky situation.

It may be sticky but I think with companies like Exxon reporting record profits that there should be something in there preventing any "relief" to them.

[BurgundyNGold]

It may be sticky but I think with companies like Exxon reporting record profits that there should be something in there preventing any "relief" to them.
Oh, I agree. If I were the Congree, I would hold meetings with those companies and ask them to voluntarily let the government off the hook. That way, if they do then great. It they don't, at least you can say "we tried to be reasonable" before you change the agreement midstream and levy the royalty charges at new, increased rates. ;)

[RedskinsDave]

Oh, I agree. If I were the Congree, I would hold meetings with those companies and ask them to voluntarily let the government off the hook. That way, if they do then great. It they don't, at least you can say "we tried to be reasonable" before you change the agreement midstream and levy the royalty charges at new, increased rates. ;)

Nah, then we'll just see a new gas station for members only pop up on the Hill with gas at .50 a gallon. ;)

[Keino]

I wholeheartedly agree with your perspective on the "relief", but to be more accurate, oil was probably trading somewhere around $20-24/bbl in '98, '99 and is currently around $60/bbl. There is, however, the ethical question of whether it's OK for the government to make a deal and then change it midstream. It's a sticky situation.

I used the $10 figure that the NY times article used. I'm not even sure that it is the article Spence linked us to, I had just happened to read it and saw the the thread.

For me, this is not an ethical issue. The Ethical obligations of the Govt. are to serve the best interests of the people. In the wake of record profits, Oil producers do not need the concessions, especially given the amount of Budget Deficet Spending and in light of the Growing (Exponentially) of the National Debt. The other question is the actual intent of the legislation in 96.

Edit....that comment was childish.

[BurgundyNGold]

I used the $10 figure that the NY times article used. I'm not even sure that it is the article Spence linked us to, I had just happened to read it and saw the the thread.

For me, this is not an ethical issue. The Ethical obligations of the Govt. are to serve the best interests of the people. In the wake of record profits, Oil producers do not need the concessions, especially given the amount of Budget Deficet Spending and in light of the Growing (Exponentially) of the National Debt. The other question is the actual intent of the legislation in 96.

Edit....that comment was childish.
I'm not giving you grief or anything. Politicians only speak in hyperbolic terms, so of course their painting $10 and $70 figures as the norm is wrong. Oil might've hit $70/bbl for a short while, but not for long. Same with the $10/bbl figure in the 90s.

As for the ethics, when government needs to deal with industry and vice versa, establishing and maintaining trust is important. It would not be wise for the government to reneg on it's deal for future dealings with any aspect of the provate sector. It goes to credibility. However, I agree that its interests are to the people. That's why they should change the law moving forward and try to lean on Big Oil to pay their fair share on their own.

[dukeuch]

Wasn't he the only oil man to ever loose money selling oil?

America should have seen the pattern.

Yeah, right up there with Trump losing money on casinos.

[dukeuch]

The administration seems to have no problem breaking "deals" regarding funding of Medicaid, Medicare, Social Security, Education, etc. They should have no problem "breaking a deal" with these oil companies either.