Tuesday, July 12, 2011
Hey Dems, Want Some "Revenue"? How About Issuing Oil Leases?
Listening to Obama and his Obamatons, you'd never know that other sources of potential revenue besides taxes are available. And some of the most promising sources of non-tax revenue are begging to pay: U.S. companies that want to drill for oil here at home.
According to this nation's very own Department of the Interior, one of the biggest sources of non-tax income we already have are the royalties collected by the federal government from companies paying for federal onshore and offshore mineral leases. The size of the royalty payments is based on the value of the oil and gas actually produced. For onshore wells, the royalty payment equals 1/8 of the value of the oil or gas produced. For example, for each barrel of crude oil selling for $95 (today's price as I write), the royalty due would be close to $12.
For companies leasing offshore wells, the royalty is considerably higher: 1/6 of the value of the oil or gas. For an offshore well, the royalty due would be $15 per barrel of crude oil selling for $95.
That money doesn't get collected at some pie-in-the-sky future date, either. It's due within 30 days of production.
Half of that money goes directly into the U.S. Treasury, so Timothy Geithner may have heard of it, though you never hear him mention the possibility of issuing more oil leases to "increase revenue" or help America's struggling economy.
Environmentalists take note: the next biggest chunk of that money--$900 million per year--goes to the Land and Water Conservation Fund to maintain park lands.
States get a piece of the action too.
Right now, most of these royalty revenues come from natural gas production. That's not surprising since Obama has spent much of his apparently limited energy putting the kibosh on as much oil exploration and drilling as possibly, most notably with his official and de facto moratoriums on offshore drilling. On the Gulf coast, Obama's moratoriums cost 19,000 good-paying oil jobs and $1.1. billion in wages (and counting), not to mention the indirect losses of jobs and income. At least one Gulf of Mexico drilling company, Seahawk, was forced into bankruptcy by what even Democrat Senator Mary Landrieu of Louisiana called
"the administration's excruciatingly slow release of oil and gas permits."
Obama doesn't just hate drilling in the Gulf. He's also placed "a full-scale, seven-year moratorium on drilling along the East and West Coasts" and has refused to permit drilling on even a tiny wasteland patch of the Arctic National Wildlife Refuge.
As of May, Obama's revenue collectors had seen fit to issue only 10 drilling permits in over a year. At least 270 shallow and 52 deepwater drilling permits are gathering dust in "bureaucratic limbo."
In 2010, Americans consumed 6.99 billion barrels of crude oil, 19.15 million barrels per day. If the U.S. increased our production by only a single day's consumption at today's crude oil price, the royalty revenue would be about $230 - $287 million. That's about a billion every four days, and it equals about 1/4 of our current debt interest. Interestingly, if we increased our current U.S. oil production by a 4 or 5 day consumption supply at today's crude prices, the royalties earned would about equal the current interest on the national debt.
So, come on Dems, let's solve some of our fiscal woes with a little drill, baby, drill.
Forget about lower energy bills and improved national security. Just think of it as sticking it to rich oil companies.
Linked at Shout First, Ask Questions Later. Thanks!
Posted by Quite Rightly at 8:00 AM