The Energy Crisis—What’s Not Helping

Bush administration officials are ignoring the law and giving away tens of billions of taxpayer dollars to oil companies that are already swimming in cash.

Bush administration officials are ignoring the law and giving away tens of billions of taxpayer dollars to oil companies that are already swimming in cash. When oil companies drill on federal land and in coastal waters, they owe royalties to the federal government. The payments are the country’s second-largest source of income, right behind taxes. However, The New York Times reports, “An eight-month investigation by the Interior Department’s chief watchdog has found pervasive problems in the government’s program for ensuring that companies pay the royalties they owe on billions of dollars of oil and gas pumped on federal land and in coastal waters.” As a result, billions of dollars that could be invested in the development of clean, renewable forms of energy are instead being used to subsidize outrageous compensation packages for oil company executives. Interior Department Inspector General Earl Devaney told Congress, “Simply stated, short of a crime, anything goes at the highest levels of the Department of the Interior.” Join the effort to get the Bush administration to stop giving away your money.

  • The interior department conspired to cover up problems. A forthcoming report by the Interior Department IG “will allege that Interior Department officials covered up a problem with oil and gas leases after it was discovered in 2000, according to congressional aides.” Also, the IG “has been investigating whether Johnnie Burton, head of the agency that collects royalties, might have been told about the problem earlier than she said in congressional testimony last fall.” Burton told the committee that she first learned about the problems in 2006. She later “revised” her testimony, acknowledging that she learned about the problems in 2005 but didn’t understand their “significance” until 2006.
  • Give-ways to oil companies don’t increase oil production. Massive giveaways to oil companies are justified by the need to spur the domestic production of oil. As it turns out, that’s not the case. A study by the Interior Department found that the tens of billions in “inducements” would create “only a tiny increase in production even if they were offered without some of the limitations now in place.” The report found the incentives “would lead to the discovery of only 1.1 percent more reserves than if there had been no incentives at all.” The study also found that “the cost of that additional oil could be as much as $80 a barrel, far more than the government would have to pay if it simply bought the oil on its own.”
  • Now is the time to truly address our nation’s energy crisis. On Thursday, the House of Representative will take up a bipartisan bill—The Clean Energy Act of 2007—“aimed at recouping lost royalties and stripping oil and gas companies of other tax incentives.” The bill would also “shift $13 billion into a fund to promote energy efficiency and development of alternative and renewable energy sources.” Learn more about at the bill from our Kick the Oil Habit campaign.

Daily Talking Points is a product of the American Progress Action Fund.

The positions of American Progress, and our policy experts, are independent, and the findings and conclusions presented are those of American Progress alone. A full list of supporters is available here. American Progress would like to acknowledge the many generous supporters who make our work possible.