April 13, 2007 -GAO REPORT UNDERSCORES NEED TO END BIG OIL'S ROYALTY RIP-OFF

WASHINGTON, D.C. – Representative Edward J. Markey (D-MA), Chairman of the House Select Committee on Energy Independence and Global Warming, and a senior member of both the Natural Resources and Energy and Commerce Committees, today welcomed the release of a Government Accountability Office (GAO) report confirming that the federal government currently stands to lose billions in oil drilling revenues from faulty leases for oil and gas extraction from federal lands and waters.  The GAO report, “Oil and Gas Royalties: Royalty Relief Will Cost the Government Billions of Dollars but Uncertainty Over Future Energy Prices and Production Levels Make Precise Estimates Impossible at this Time,” found that the absence of price thresholds in oil and gas leases issued in 1998 and 1999 has already resulted in $1 billion in forgone revenues to the federal government, and that if this problem remains uncorrected these losses could rise to as much as $10.5 billion in the future.

Rep. Markey said, “The GAO report underscores the need to bring an end to big oil’s royalty rip-off.  The House has already approved legislation (H.R. 6) which would force the oil companies to renegotiate the 1998-99 contracts to ensure that the taxpayers were paid a fair price for drilling rights on public lands.  It is time for the Bush Administration to drop its opposition to this legislation, so that we can fix this problem once and for all.”

Markey added, “It is also time for the oil companies to stop threatening to sue the federal government for seeking to protect the taxpayer’s interests in being paid a fair price when companies drill on the public’s land.  The infamous Kerr-McGee case, for example, stands as a monumental example of untrammeled greed.  While I am confident that the courts will ultimately decide against the plaintiffs in this case, it is absurd that our judicial system is being tied up with this type of frivolous litigation by Big Oil.”

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FOR IMMEDIATE RELEASE
April 13, 2007

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