Wyden - Sununu Amendment Would Stop Royalty Relief for Oil Companies
Washington, D.C. - In an effort that could save taxpayers more than $45 million over the next ten years, U.S. Senators Ron Wyden (D-OR) and John Sununu (R-NH) introduced an amendment today that would repeal Sections 344 and 345 of the Energy Policy Act of 2005 (EPAct). Repealing these provisions would stop the negotiation of certain future royalty relief incentives designed to encourage drilling for deep gas and existing deepwater oil and gas on public lands.
"With oil selling for more than $65 a barrel, even President Bush agrees that royalty relief isn't necessary to get oil companies to drill for oil and gas," said Wyden. "In my view, Congress should be examining whether oil companies are paying enough in royalties, not funding more giveaways at the American taxpayer's expense."
Senator Sununu said: "I support expanding our domestic energy supply, but not at the expense of taxpayers in the form of subsidies for U.S. or foreign oil companies. If private companies want to extract oil and gas from public waters, they should pay royalties for the privilege. This amendment restores that responsibility."
Oil and gas companies that drill on federal lands - either onshore or offshore - must pay royalties to taxpayers through the U.S. Department of the Interior. In the mid-1990s, when oil sold for less than $20 a barrel, Congress passed a series of offshore "royalty relief" provisions designed to encourage deepwater oil production in the Gulf of Mexico. These provisions exempted companies from paying royalties on oil and gas unless the price rose above certain thresholds. Flawed leases and a series of oil industry lawsuits have opened the door for abuses putting tens of billions of dollars in royalty payments at risk.
With the Energy Information Administration expecting the price of oil to remain over $60 a barrel for the indefinite future, Senators Wyden and Sununu agree with the assessment made in the President's 2008 Budget Request to Congress, which stated: "Additional royalty relief for oil and gas exploration is unwarranted in today's price environment."
The Wyden - Sununu amendment was offered to H.R. 6, the Senate Energy bill.