Republicans In Congress Ask Trump For Royalty Reduction for Oil and Gas Companies

Graphic: Drillersclub.com (yes this is really a website)

The Hill reports that on Friday, 14 Members of Congress (13 Republicans and 1 Democrat) asked the Trump Administration to use its authority to temporarily reduce or eliminate royalties they are required to pay the government under their leases.  This financial relief would not need to be approved by Congress (in fact some Democrats introduced legislation to prevent this) and is in addition to the 30 million barrels of oil the government promised to buy from U.S. producers to be added to the Strategic Petroleum Reserve.

Why This Matters: The oil and gas industry has received enough handouts.  The last thing our country needs right now is more cheap gas.  At current prices, the gas is worth much less on the market than it costs to extract it. If these companies want to pay less in royalties then they should pump out less. Period. Other parts of our economy need help much more right now.  

This Smacks of Corporate Socialism

Here is what the lead Republican, Congressman Dan Crenshaw of Texas said to justify the royalty reduction request:

“This call for royalty relief on offshore oil and gas will help ensure that the cost of production isn’t more than the price of the commodities. This is especially important for America’s smaller producers – many of whom are based in Texas – who feel the burden of these royalties the most.”

The Members of Congress also admitted in the letter that the request is mostly in reaction to the price war with Russia and Saudia Arabia, only throwing in coronavirus offhand.  They said that reducing royalties would “in the short term will help mitigate a price war that is sinking prices and decreasing production.”  Democrats pushed back on these grounds.  Senators Bernie Sanders, Jeff Merkley, and Ed Markey even proposed legislation that would prevent the administration from reducing royalty rates for coal, oil or gas recovery by executive action. According to The Hill, “they wrote a letter to President Trump last week, saying that giving federal assistance to oil companies ‘would be a wasteful misuse of government resources that would exacerbate the climate crisis.’”

To Go Deeper:  To read the full letter Republican letter, click here.  To read the Democratic letter, click here.

What You Can Do: Sign the Western Values Project’s Petition against oil and gas bailouts by clicking here.

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