The oil industry won a razor-thin but significant victory on oil royalties the other day in the US Senate.
But the debate was debased with misinformation and anti-oil bashing not seen here for a decade.
For the past 2 years, the US oil industry has been trying to persuade the Minerals Management Service to modify a pending rule that changes the way royalties are calculated on oil production from federal lands.
MMS has been intransigent on some of the key issues, so last year oil-state senators amended the Department of the Interior spending bill, blocking MMS from issuing the rule until a compromise was reached. That moratorium was due to expire Sept. 30.
When Sen. Kay Bailey Hutchison (R-Tex.) attempted to extend the ban until Sept. 30, 2000, Sen. Barbara Boxer (D-Calif.) filibustered.
Oil-state senators needed 60 votes to shut off debate but mustered only 55 the first time. Last week, the Senate voted 60-39 to stop the filibuster and then voted 51-47 to approve the amendment.
Debate
In a 9-hr debate, proponents said the royalty rule change would raise an extra $66 million/year for the federal government because crude would be valued at market transactions rather than at posted prices.
Sen. Hutchison argued that was a de facto royalty rate increase and that the added expense would be passed on to consumers in gasoline prices.
She said, "I think it's important to take a stand that Congress should make tax policy, not federal agencies."
Sen. Mary Landrieu (D-La.) said the oil industry has just begun to recover from a year of low prices. "We should not be badgering this industry at this time, particularly when they have a legitimate request."
The issue was simple for Sen. Boxer. "The Senate has a chance to stop this thievery in its tracks. It's the oil companies vs. the people."
Sen. Russ Feingold (D-Wis.) said that, in 1997-98, five major oil companies donated more than $2 million to political campaigns and now they were calling in their chits.
The future
Although the key battle was in the Senate, hurdles remain for the royalty moratorium.
The House-passed spending bill did not contain a royalty rule moratorium, but a conference committee is likely to keep the provision. If an Interior spending bill isn't passed, it would have to be inserted into a continuing resolution.
Oil lobbyists hope the 1-year moratorium will permit fresh negotiations, since the key Interior personnel have changed.
MMS Director Walt Rosenbusch has been on the job only a few months. And Sylvia Bacca is awaiting Senate confirmation as Assistant Secretary for Land and Minerals.
An oil lobbyist said, "It's unfortunate this royalty issue has slid into the mire of politics and demagoguery. Industry recognizes that posted prices are history. We've made a sincere effort to negotiate with MMS for a workable rule."
Ironically, environmentalists are complaining bitterly that oil interests have used a spending bill amendment to set "back-door" policy.
They should know. They've used the same tactic to block offshore drilling off some states for 2 decades.
