Sunday, July 23, 2006

“Ceding” Money to the Gulf States

Wednesday, the Senate agreed to a deal that would share more offshore oil drilling revenues with the Gulf States:
Four states -- Texas, Louisiana, Alabama and Mississippi -- would receive 37.5 percent of drilling fees from production in newly opened areas under the Senate bill. An additional 12.5 percent would go to a land and water conservation fund, and the remaining 50 percent to federal coffers.

All drilling fees from U.S. offshore oil and gas production currently go to Washington.
The House passed a bill with more generous revenue sharing in it last month:
Under the bill, states -- which currently receive less than 5 percent of oil and gas royalties -- would see their share jump to 50 percent over 10 years. Eventually they could get as much as 75 percent of royalties from drilling.
Before I go on, let me state that I don’t like these bills. They both open up the Gulf for *more* oil drilling. I don’t want to see us drill more oil. I would rather see us use less of the oil we have access to and use it more wisely.

But, I do want Louisiana and the Gulf States to be as compensated for offshore drilling as other states are compensated for onshore drilling – an argument I have made before (please excuse the title). I just want it to be for the offshore drilling that already exists.

However, while I look at these bills and see the Gulf States finally being treated like all the other oil producing states, some lawmakers see the Gulf States getting special treatment.

In the House:
"This is a fiscal nightmare," said Rep. Edward Markey, D-Mass, pointing to a chart showing the billions of dollars that would flow to the Southern states. "This money should remain in the budget for our troops in Iraq, it should remain in the budget for Medicare recipients, it should remain in the budget for the poor children of our country."
In the Senate:
"This is bad fiscal policy for the country," said Sen. Jeff Bingaman of New Mexico, the ranking Democrat on the energy committee. "It is starting us down the road of ceding to coastal states revenues from off-shore drilling at a time the government needs all the revenues it can get, given the size of the deficit."
So, let me try to process this. If the Gulf States receive the *same share* of money for oil produced off its shores that other states receive for oil produced on their land, the Gulf States would be stealing from the troops in Iraq, stealing from Medicare recipients, stealing from poor children, and stealing from the U.S. Treasury. It would be “a fiscal nightmare” and “bad fiscal policy for the country.” The country would have to “cede” money to the Gulf States at a time when that money is needed to pay off a $2.9 billion deficit.

That hurts. Not only do they say we would be hurting the troops, they accuse us of wanting to take money away from sick senior citizens and poor children. Poor children! Thanks for the support, guys. Oh, and I am sure that if the bill doesn't pass you would definitely use the oil revenue to pay down the deficit - like you've been doing up to this point. Or not.

The Senator from New Mexico is complaining that the Senate plan would divert too much money away from the U.S. Treasury and back to the state where the revenue came from. Maybe he would like to offer up some of New Mexico’s share of oil revenues to help pay down that deficit. After all, they get 50 percent of all revenues produced from onshore drilling on federal lands and then they benefit from another 40 percent that goes to a U.S. Treasury fund for water reclamation projects to be used in the West, which includes New Mexico.

Louisiana doesn’t have that luxury. We don’t have the same revenue sharing breakdown for oil produced off our coast. That’s all we are asking for – the same. Not special treatment. Equal treatment.

But not more drilling, please.


Patrick Armstrong said...

Thank goodness these agreements passed over the objections of such knuckleheads.

You guys should get your Reps and Senators to present a bill to these delegates for the troops Louisiana, Mississippi and Alabama have sent to Iraq, a list of those three states' Medicare recipients and a ranking of those three states as far as education is concerned.

Profit sharing with Louisiana, Alabama and Mississippi, if managed correctly, can benefit many veterans, raise economic standards (therefore increasing Medicare reciepts through income), and help fund three states who need cash for education of some of the nation's most at risk children.

And then top all that off by reminding those knuckleheads how much they took out of the US Treasure in pork projects for their home states.

bayoustjohndavid said...

Great Post, I planned on posting abut it before I got sidetracked by the Friday and Saturday papers. I also have doubts about the bills and even doubt that I'd support them if I lived elsewhere. I would expect the government to compensate La. for lost revenue--past and future lost revenuse. As a Louisianian, my major objection is that sharing starts now (most of it in ten years in one bill), the loss of wetlands has been occurring for decades, yet La.'s share of the (future) revenue will be the primary source of funding for wetlands restoration. It's possible that I misread the bills, I haven't paid as much attention as I should have.

I respected Bingaman's reasons when they had to with control of drilling-- face it, you give that control to cash-starved states, there's the very real possibility that some gulf coast beaches could end up looking like W. Va. mountains. But that reason is totally hypocritical and Markey should realize that he sounds like a fool and a hypocrite whether he was sincere or not.

One thing I think you left out, La.'s offshore boundary begins at 3mi., Texas and Fla.'s begin at 12mi. I'm not sure how much the difference affects current revenues for La. and Tx.; it certainly made Tx. a lot richer in the past.