Natural Resources Committee Democrats from the House and Senate are pushing the Department of the Interior to drop a proposal to decrease the offshore oil and gas royalty rate, Reuters reports.
The Interior Department proposal, if adopted, would be the first change in the royalty rates since the Bush administration raised rates from 12.5 percent to 16.7 percent of oil and gas sales. Congressional Democrats argue that cutting the royalty rate would swindle U.S. taxpayers.
“This proposal would amount to a giveaway to some of the most profitable companies in the world and rob taxpayers of potentially billions of dollars of revenues over the life of the leases,” Sen. Maria Cantwell of Washington and Rep. Raul Grijalva of Arizona wrote to Secretary of the Interior Ryan Zinke, according to Reuters.
The oil and gas trade group Western Energy Alliance (WEA) pushed back against the claim that oil and gas companies paying a lower royalty takes advantage of taxpayers.
“The oil and natural gas industry is the second largest source of revenue to the federal government after the IRS,” the WEA said in a statement, according to Reuters.
Lowering the royalty would incentivize more offshore drilling while Zinke has proposed opening more than 90 percent of the Outer Continental Shelf (OCS) to oil and gas development. Former President Barack Obama had closed off vast portions of the OCS to drilling along the Atlantic and Pacific coasts and in the Arctic.
Bush raised rates in 2007 while the price per barrel of oil was high and rising. The average price of oil, adjusted for inflation, was $75.66 for a barrel of oil in the U.S. The next year, the price hit an inflation adjusted $103.67, according to Inflation Data.
In the first two months of 2018, the price per barrel of oil of West Texas Intermediate, the U.S. benchmark for oil prices, has not risen over $66.14.
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