Guest Post: Bureaucratic Blunder Helps Over 100 Oil Companies Avoid Paying Royalties

Tyler Durden's picture

Submitted by James Burgess of,

Democratic lawmaker Representative Edward Markey of Massachusetts has used information from the Interior Department to form a report which claims that more than 100 oil and gas producers, including Chevron Corp. (NYSE: CVX), BP Plc (NYSE: BP), Exxon Mobil Corp. (NYSE: XOM), Royal Dutch Shell Plc, (NYSE: RDS-A) and ConocoPhillips (NYSE: COP), have benefitted from bungled leases awarded by the federal government.

The leases enabled the companies to drill for oil and gas in federal waters without paying, or at least paying at a much lower rate, any royalties.

Chevron was the biggest winner, avoiding an estimated $1.49 billion out of a total $2.62 billion that they should have paid for the right to drill.

Under a law passed in 1995 any leases signed between 1996 and 2000 offered lower royalty fees in order to encourage drilling whilst oil and gas prices were so low; once the price rebounded above a certain level a clause in the lease stated that the royalties would return to the normal level.

Due to bureaucratic error, all leases signed in 1998 and 1999 failed to include a price threshold at which point the royalties would revert to normal levels once oil and gas prices rose.

In 2006, George Bush’s administration asked companies to voluntarily renegotiate the leases in order to correct the obvious mistake; nothing happened. Representative Markey is now trying to push for legislation that would force the oil companies to renegotiate the leases.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Silver Garbage Man's picture

I hope this fucking fraud ponzi blows soon. Let start moving forward for real.

ACP's picture

Damn, it's cheaper for them to pump oil than it was to pump Melissa King.

ZerOhead's picture

Due to bureaucratic error,

Find the bureaucrat and take away his private jet and island...

eatthebanksters's picture

Whois Obama gonna blame for this one?  Billary?

Bicycle Repairman's picture

It wasn't a mistake.  They believe that American gas and oil is their property.  And we are just another variety of sand nigger.

TBT or not TBT's picture

Better to have it above ground on the market than underground, with the least possible taxation possible. Starve problems and feed solutions. Federal govt is the problem.

scaleindependent's picture

You fucken idiot!

It is not Exxon or BP's land. It is as if Exxon started siphoning a big oil find in your land and not paying YOU.

If they are going to rape the U.S. federal lands, then give me my share first. Divide all U.S. land by the population of U.S. citizens and give it to them, not to some CEO making 40 million a year.

I hate Dumb idiotical fascist apologists.

Teamtc321's picture

Why it's Booshes fault of course. I can just see the News Release now. 

OboMao will soon engage his chief negotiating specialist, Maxine Water to quickly, effictively and at Zero cost to tax payer's, correct the wrong doing by Big Oil and Evil Speculators! This is the least we can do for American People and the Middle Class the release will proclaim.

I would venture to say it will also be suggested to be openly broadcasted on CNN someday as well. 

Hope, Hope and Change you can Believe In!!


Monedas's picture

Maxine Waters face looks like the Athabasca tar sands ! 

rayduh4life's picture

What evidence do you have that would lead you to conclude that an error had occurred?

Woodyg's picture

If these were just 'innocent errors' you'd think that every once in a while one of those 'errors' would benefit the People instrad of benefitting the connected predatory corporate scumbags.

But hey just have grandma be happy with catfood and it's all good!

Didn't we hang a bunch of these fascists at the end of WW2?

MiguelitoRaton's picture

In other news Markey's re-election campaign fund just went up by $10M. In totally unrelated news Markey proclaims the problem unsolvable, but government will do the leases correctly next time.

Bandit und Buster's picture

Do these pretend representative DO ANYTHING to earn their perks and pay??????????

Time to start burning them in effagy (sp?) to send a message!

Dr. No's picture

I would be happy to pay them if they promised to do nothing. The problem is politicos do stuff.

RopeADope's picture

In the manner in which Bernanke bungled his economic theories.

Kirk2NCC1701's picture

It's a "Bungle, Bungle" party!   Only well-oiled clientelle allowed (front or read-door) entry.

Ness.'s picture

It's a dead man's party, who could ask for moar?.


Featuring the "Bernanke" on vocals with Timmay G. on drums.


fuu's picture

The Beard and The Grin are not fit to clean Elfman's toilets, great tune though.

Decimus Lunius Luvenalis's picture

No shit considering law firms hired by lobbyists regularly write proposed legislation in just about every industry.  It's takes no imagination that the leases were produced in the same manner.  After all, this is the same Minerals Management group that was banging oil industry reps and finding ways to skim off the royalty-in-kind program up until 2008.   

LetThemEatRand's picture

Next thing you know the oil majors be asked to contribute to the cost of the military action that opened huge leases in Iraq.  No, nevermind.

swissaustrian's picture


That's the real subsidy to big oil - wars.

rayduh4life's picture

Just thankful that we let the iraqi people use their oil to pay for the war.

khakuda's picture

Obama has been trying to demonize oil companies to get more tax money from them, when they actually pay some of the highest rates going. Tobacco was the template, just like they are trying to do with soda now. Demonize, regulate, tax and ultimately become partners with the most profitable companies out there to get more money to grow government b

LetThemEatRand's picture

So you are saying that the big oil companies are suffering financially then?  

TBT or not TBT's picture

Dems demonize businesses in order to get campaign money from them. That's how modern liberal fascism works.

Businesses that don't pay up get lots of regulatory attention from dem pols and dem bureaucrats and dem connected activists lawyers.

It is how we got here. How the banks and insurance sector ended up democrat. Tech as well.

Cdad's picture was "bungled."  It was a mistake.  I'm sure it was not yet another of those endless fascist give-a-ways.  I'm sure this bungle won't put pressure on smaller oil companies that did not have the inside track on cheap leases.

You simply can't make this stuff up as fast as it is happening.  

MiguelitoRaton's picture

What kind of world do we live in where a bought politician doesn't stay bought...who can you trust?

TBT or not TBT's picture

BP did the lambada for liberals before the oil spill occurred for a solid decade and still got dictated a 23 billion dollar cleanup without trial or investigation. Pilloried by the prez hizzself.

Dr. No's picture

I'll tell you something. This country is going to the dogs. You know, it used to be when you bought a politician, that son of a bitch stayed bought.

nasa's picture

Fucking typical outcome from these dumb fucks....   (walking off screaming fuck)

orangegeek's picture

And every politician involved has 10M parked in an off shore account.


Checks and balances you say?  What's that?

knukles's picture

In banks overseen by the Fed, monies sent over the Fed wire, never investigated by the DoJ, income not reported to IRS and never ever audited....

Pshaw, coincidences

rayduh4life's picture

Think we'll ever get to see an FBAR to go along with those tax returns they don't won't to show us?

Ness.'s picture


March 6 (Bloomberg) -- Former U.S. Vice President Al Gore left the White House seven years ago with less than $2 million in assets, including a Virginia home and the family farm in Tennessee. Now he's making enough to put $35 million in hedge funds and other private partnerships.

Al Gore net worth: Al Gore is a former senator, Vice President, environmental activist and entrepreneur who has a net worth of $300 million. Al Gore has achieved a lot in his years in the public eye, both in the public and private sectors. In addition to his net worth, he's considered one of the most influential activists for the environment. 


tony bonn's picture

"Due to bureaucratic error, all leases signed in 1998 and 1999 failed to include a price threshold at which point the royalties would revert to normal levels once oil and gas prices rose."

bureaucratic error my ass.....some paralegal and the attorney present at lease signing were paid a hefty bonus by the oil companies to "accidentally" omit the required clause....

freecrafted's picture

Gee I hope I could go back and 'renegotiate' any bad deal I've ever done.

"Broker you should have realized that trade was nothing more than a fat finger mistake, now give me my losses back."

If I was the oil companies I would those bureaucrats the proverbial finger. A contract is a contract is a contract. You don't get to renegotiate it just because you f@cked up!

spooz's picture

So when the cronies successfully game the system at the taxpayer's expense, more power to them, huh?

knukles's picture

That's what they fucking do on the exchanges!
When thees a big blowup, trades get cancelled.
WTF think's going on?

rayduh4life's picture

Freecrafted,  when was a contract is a contract is a contract ever a Contract?

Bandit und Buster's picture

They oughta take the missing $$ out of the bungling bearuorats ass! er, I mean his retirment and salary!

GMadScientist's picture

You're talking about people who were raised in a culture of infinite mulligans.

freecrafted's picture

F@cking indian givers!

Whatta's picture

sheee-it. Royalty Clawback is a'comin.

I am having to pay royalty clawbacks on some wells in OK...surely our Esteemed Gubermint (see zh's Founded By Geniuses, Run By Idiots) can finger out how to get paid.

NoDebt's picture

Sure.  They'll pass another 3000 page swiss-cheese bill that will take 7 years to implement and then they won't enforce it just like they don't enforce the rules they've already got.  It's called "doing something."  Anything.  Doesn't matter what.  Just DO SOMETHING (as long as it involves passing more laws and implementing more rules).


swissaustrian's picture

Chevron avoided paying 1.49 billion? That's all? Total peanuts compared to the financial industry.