Date: 2006-02-14
Speaker: GEORGE MILLER (democrat)
Chamber: H
State: California

Mr. Speaker. today Americans woke up to the unfortunate news that because of the actions of this Congress. the major oil companies that are .drilling in the Gulf of Mexico are in all likelihood not going to be paying any royalty on billions of dollars. some $65 billion worth of oil. that they will be extracting from the Outer Continental Shelf of this country and on which they would be.expected to piy some $7 billion in royalties. and. in fact. they may not be paying that. It may go even further that some of the majors have suggested that they are not required to pay any royalties on oil extracted from the Outer Continental Shelf. In that case. the cost to the taxpayers would be maybe $35 billioA. $35 billion in lost revenue to this country at a time when we are running record deficits. at a time when we are telling people we cannot afford to help them with their home heating oil. at a time we are making basic cuts to basic education. and it goes on and on and on and on. The fact of the matter is the policy of royalty relief that the Congress passed was an unwise policy when we passed it. But the oil companies convinced this Congress to do so. and they have convinced the administration to allow it to continue. Although the Bush administration opposed the further extension in expansion of the oil royalty relief program that was in their most recent energy bill that was just signed by President Bush. unfortunately. his opposition did not go to such an extent that he insisted that it be taken out of thebill. So what do we have? We have the major oil companies securing leases on land that is owned by the public. land that is owned by the taxpayers of this Nation. to go in and to drill those lands. And in exchange for that. they said that they would not go in there and drill unless we gave them royalty relief. unless we took away the royalties that they were entitled to pay to the landowners. the taxpayers of this country. for the privilege and the right to drill those reserves. These are some of the most important reserves in this country. They are some of the more important reserves in the world. There is a huge amount of competition for drilling for this. At the time. it was suggested that nobody would bid on these leases. that nobody would participate. that nobody would raise the capital to do so if they did not have royalty relief. The factof the matter is I think the record will show that at the same time they were arguing that. they were already in the construction of the rigs that were necessary for deepwater drilling and that the decisions hadalready been made. Some companies decided they would bet on the gulf. Other companies decided they would go to the Caspian Sea. But the fact of the matter is the competition was hot and heavy. For this Congress to have then just given away those royalties is a horrible mistake. and it is a mistake that the Congress must correct. Nobody. even the proponents of royalty relief. believed that. there was going to be a complete escape from the royalties owed to the taxpayers for the development of this oil. They believed. as the administration has said. that at a minimum they were not going toget oil royalties relief. they were not going to get relief from the payment of the rent to the taxpayers if oil was over $34 a barrel. Well. as we all know. the world price of oil today is hovering around $60 a barrel. It has been as high as $70. and it has been in the mid50s. back and forth. The fact of the matter is these very same oil companies that are seeking a royalty holiday. freedom from the payment of these royalties. have justreported the biggest profits in the history of these companies. in the history of the world in the oil industry. And at the same time. they are suggesting that they have no obligation to pay the taxpayers of this country what is due them for the privilege of drilling on the Outer Continental Shelf. Today. some of us introduced legislation to prevent any future royalty holidays for the oil companies. to seek and direct the Minerals Management Serv_ ice to renegotiate these leases so that it does include- the provisions of a minimum of a trigger but hopefully even a better royalty policy than that. and if those companies do not want to cooperate with that renegotiation. then they should be barred from future bids on the Outer Continental Shelf. Now. to their credit. some of the major oil companies are suggesting that. in fact. they do owe the royalties. that there is a trigger mechanism. But KerrMcGee and apparently some other companies have decided that they are going to challenge the whole law. They believe they are not obligated to pay any of these royalties. there is no trigger in this law. If that is the case. the taxpayer is just going to be hung out to dry by the major oil companies. and the major oil companies are going to abscond with the natural resources that belong to the people of this country. It is wrong and Congress ought to correct it.