Oil Royalty Valuation Background According to the Department of the Interior's
Minerals Management Service (MMS), oil companies underpay royalties on the
natural resources they extract from public lands by an estimated $66
million per year. Oil companies are supposed to pay a royalty based on
percentages of gross production. Big oil companies, however, have lowered
their royalty rates by paying on "fictional" posted prices, which can be
as much as $2 per barrel lower than actual daily market price. For the
past three years, the MMS has attempted to institute reforms that would
create a fair, market-based payment process for oil valuation, and make it
easier for the government to catch underpayments. However, Congress has
blocked the implementation of these rules until March 15, 2000.
Green Scissors Proposal Allow the MMS to proceed with final
rulemaking, ensuring fairer oil royalty payments to the U.S. Treasury and
reducing the subsidy to an environmentally damaging industry.
Project Hurts Taxpayers Oil on federal land is a taxpayer asset
that should be managed in a way that provides a fair return to taxpayers.
Basing royalty payments on the market price maximizes the return to
taxpayers. The prohibition on promulgating reform regulation costs
millions of dollars owed to the American public.
Project Hurts Environment The burning of fossil fuels
contributes to air pollution, smog, and global warming. Subsidizing the
oil industry only encourages the development and misuse of the dirty fuels
that contribute to these problems.
$330 million