Empty Tank: Expanding Drilling Without Holding Big Oil Accountable on Royalties Is Bad Deal for Taxpayers
March 31, 2010
Empty Tank: Expanding Drilling Without Holding Big Oil Accountable on Royalties Is Bad Deal for Taxpayers
Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
The Obama administration should not lift the moratorium on offshore drilling that has been in place since 1982. Offshore drilling does not solve our nation’s energy needs and is a dangerous distraction from real solutions.
Making a bad situation worse, President Barack Obama’s plan to pursue a broad expansion of offshore drilling while failing to hold Big Oil accountable on royalty reform will leave taxpayers shortchanged by billions of dollars.
This would have been bad energy policy in the 1980s; it is intolerable in 2010.
In his first budget, Obama proposed a new excise tax on offshore oil and gas drilling that would have raised $6 billion over 10 years, but Congress never approved it. Obama dropped the idea from his 2011 budget, unveiled in February.
The oil industry has long avoided royalty payments to the U.S. Treasury for pumping oil, a bureaucratic oversight that will save Big Oil from paying billions of dollars it owes taxpayers in foregone revenue over the life of the leases.
Allowing new oil and gas drilling to proceed without holding current leases accountable constitutes a massive taxpayer rip-off.
Environmentally, Obama’s proposal fails to address the country’s energy needs and realities. Increasing oil and gas drilling poses risks to coastal communities and ecosystems while encouraging more fossil fuel burning – undercutting the administration’s goal of addressing climate change.
And opening these areas to drilling won’t save Americans much at the pump: According to the Department of Energy, keeping the offshore drilling moratorium in place will result in gasoline prices being only 3 cents higher than allowing drilling and its attendant dangers to the environment. While consumers still cringe remembering gas prices exceeding $4 a gallon, the three cents saved if drilling is permitted would hardly justify the damage to our country’s coasts and the pollution accompanying drilling.
This proposal is wrong on many levels. The administration should rethink it.
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