U.S. Has Royalty Plan to Give Windfall to Oil Companies - New York Times

from NY Times:

By EDMUND L. ANDREWS
Published: February 14, 2006

WASHINGTON, Feb. 13 — The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.

Royalty-Free Oil and Gas

New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.

Based on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.

Administration officials say that the benefits are dictated by laws and regulations that date back to 1996, when energy prices were relatively low and Congress wanted to encourage more exploration and drilling in the high-cost, high-risk deep waters of the Gulf of Mexico.

'We need to remember the primary reason that incentives are given,' said Johnnie M. Burton, director of the federal Minerals Management Service. 'It's not to make more money, necessarily. It's to make more oil, more gas, because production of fuel for our nation is essential to our economy and essential to our people.' (more)

Yeah, 'cause everyone knows how terribly close the Oilies are to folding.