Trump Administration Has OK’d More Than 100 Breaks for Oil, Gas Fees
The Trump administration has awarded energy companies hundreds of breaks on payments for oil and gas extraction from U.S. lands and the Gulf of Mexico during the coronavirus pandemic, according to a government database and federal officials.
The breaks on royalty and rental payments are intended to help companies with workforce problems or other issues after the pandemic caused fuel demand to temporarily plummet worldwide.
Critics argue the breaks on government fees are unnecessary industry handouts that in some cases are benefiting companies with histories of environmental violations. Prices for oil have rebounded in recent weeks, topping $39 a barrel for West Texas crude CLQ20, -7.79% on Wednesday after dropping below $13 in late April.
The Democratic chair of the House Natural Resources Committee has requested an investigation into whether the requests for industry relief are being properly handled.
Since the end of April, the administration approved at least 117 applications for royalty reductions on U.S. lands in three Western states, according to Department of Interior data analyzed by The Associated Press.
In the Gulf of Mexico, five companies were deemed eligible for royalty relief and 12 applications from those companies have been granted, according to Karla Marshall with the Interior Department’s Bureau of Safety and Environmental Enforcement. The agency refused to provide details on the sizes of the leases, when the breaks were granted and the names of the companies involved.
The value of the breaks is unknown and will depend on how much oil and gas the companies extract.
Companies typically pay the government 12.5% royalty payments on revenues from extracting oil or gas from public lands. The administration cut that rate, in some cases to as low as 0.5%, on leases in Utah, Wyoming and Colorado.
Oil and gas royalty fees nationwide totaled almost $3 billion last year. Half of the money is distributed back to the states where the oil and gas was extracted.
Interior Department officials also have approved requests to suspend rental payments on at least 375 oil and gas leases totaling almost 320,000 acres. Rental fees bring in far less revenue than royalties — $1.50 per acre for the first five years of a lease and $2 per acre for every subsequent five years, according to the Interior Department.