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Now, Oil-Rich Leaders Mock Bush Team
Published on Monday, September 25, 2006 by the Atlanta Journal-Constitution (Georgia)
Now, Oil-Rich Leaders Mock Bush Team
by Jay Bookman

Last week, the presidents of Iran and Venezuela took to the podium at the U.N. General Assembly to lambaste President Bush, with Venezuela's Hugo Chavez going so far as to refer to Bush as the devil.

That rhetoric drew harsh condemnation from Republicans and Democrats alike, with some conservatives seizing the opportunity to bash the United Nations as well, which is more than a little silly. (Getting mad at the United Nations for being the setting of such speeches is like getting mad at Turner Field because the Braves have played so poorly.)

However, Chavez and Iran's Mahmoud Ahmadinejad have more in common than their dislike for Bush. It is no coincidence that they also head two of the most oil-rich countries in the world. Through our nation's dependence on oil and our decades-long refusal to pursue energy alternatives and energy efficiency, we have contributed to giving Chavez and Ahmadinejad the money and power to behave as they do.

The problem is, most of the steps that would ease our dependence on foreign oil have been fought bitterly by our own oil industry. Higher taxes on oil consumption, tougher fuel-efficiency standards on automobiles, substantial investment in energy alternatives — it has been impossible to get such ideas even considered by those now holding power in the United States.

And that's too bad, because what's good for Chevron and his buddies is good for Chavez and his pals, too.

One of the most maddening and illuminating examples of the oil industry's grip on the Bush administration is what's going on with deep-water oil leases in the Gulf of Mexico, where Chevron recently announced a major new find.

Back in the late '90s, the U.S. government signed more than 1,000 leases allowing oil companies to drill in the Gulf. Because deep-water drilling is expensive and risky, the U.S. government agreed not to collect its standard royalties of 12 percent to 16 percent of the price of oil or gas from those leases.

As part of the deal, though, those leases were supposed to include a provision requiring companies to start paying royalties if oil prices ever rose higher than $36 a barrel. The oil companies understood that was to be the arrangement; federal bureaucrats understood that, too. Yet when the contracts were signed, the fail-safe provision was somehow missing.

Today, with oil prices at more than $60 a barrel, that oversight has already meant a bonanza of roughly $1.3 billion for the oil industry, money that by rights ought to be going to taxpayers. Chevron alone may save more than $1 billion in royalties just on its newly announced discovery.

Outraged by that possibility, some members of Congress have tried to pressure oil companies into renegotiating their faulty leases, but their effort has been frustrated by Republican congressional leaders and the Bush administration. Bush officials are taking the legalistic approach, claiming that "a deal's a deal" and refusing to consider legal action, new legislation or any other way to possibly recoup the money.

In essence, the Bush administration claims that's just business, but it isn't. Not by a long shot.

In business, behaving as the oil industry has done in this situation would have consequences. If General Motors or Microsoft got stiffed out of billions of dollars by somebody who has displayed the bad faith demonstrated by the oil industry, you can bet their corporate lawyers and accountants would be re-evaluating every business relationship with the offending company, looking for any possible way to get leverage. They would never meekly accept such an outrage, as the Bush administration has done.

The Interior Department, which is supposed to act as the taxpayers' steward, has also cut the number of auditors investigating possible royalty fraud, which has produced yet another bonanza for the oil companies at the expense of taxpayers.

According to the nonprofit Project on Government Oversight, federal auditors recovered an average of $115 million a year in unpaid royalties between 1981-2001, making their salaries one of the best investments in government. But from 2002-2005, the number of auditors was cut and annual royalty recoveries fell to less than half the previous level.

It's gotten so bad that four government auditors who were denied permission by their superiors to pursue unpaid royalties from oil companies are now seeking to recover the money by filing lawsuits as private citizens. It's just too bad we can't sic 'em on Chavez and Ahmadinejad, too.

Jay Bookman is deputy editorial page editor. His column appears Mondays and Thursdays.

© 2006 The Atlanta Journal-Constitution


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