Scandal Plagued Oil Royalty Program Shut Down

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Oil companies will have to start paying cash for the oil they pump off federal lands, said the Interior Secretary Ken Salazar today.

The industry had so far been giving barrels of actual oil and gas to the government in return for drilling on public lands.  But the program, called Minerals Management Service, was so badly managed that it lost $21 million in royalties.

This is the same MMS that got into trouble with the Interior Department for having “a culture of substance abuse and promiscuity,” including alleged cocaine use and sex with industry contacts.  And this is the same royalty-in-kind program that was the home base for the scandal.

The oil industry isn’t thrilled.

The American Petroleum Institute President Jack Gerard:  “We urge Secretary Salazar to carefully weigh the impacts his ‘fundamental restricting’ of the royalty system could have on U.S. production of oil and gas, American jobs and revenue to the government. America’s oil and natural gas industry is ready to work with the administration to improve the royalty-collection system so Americans enjoy the benefits of increased domestic development. Raising the cost of bringing much-needed domestic supplies online in the United States is not the way to achieve energy and economic security.”

 

Photo courtesy zingyyellow

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