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Could Offshore Drilling Reduce the Deficit?

Republicans press White House for data on the government's offshore drilling revenue

Sen. David Vitter (R-La.) wants the Obama administration to provide Congress with data on the federal government’s offshore drilling revenue — information that would show just how much President Obama’s anti-drilling policies are impacting the budget.

Based on recent projections from the U.S. Energy Information Administration, production in the Gulf of Mexico is expected to drop this year by 220,000 barrels per day. With oil currently at $90 a barrel and the government’s royalty rate at 18.75 percent, that equals $3.7 million in lost federal revenue each day.

Last fall Vitter asked the Interior Department to share revenue figures, but Interior Secretary Ken Salazar ignored the request. Now, Vitter is taking his case directly to the White House.

In a letter to Office of Management and Budget Director Jacob Lew, Vitter and Rep. Jeff Landry (R-La.) called attention to recent reports that credit rating agencies are keeping a close eye on the U.S. government.

They also asked Lew to respond to seven questions related to domestic energy production:

  1. In terms of revenue generation year over year from domestic offshore energy production — considering bonus bids and royalty revenue, as well as rents and taxes from income — what has been the net revenue each year from 2007, 2008, 2009, and 2010? And what is OMB projecting to be the revenue in 2011, 2012, 2013, 2014 and 2015?
  2. Is OMB projecting revenue from lease sales in 2011 and 2012, and what is the projected revenue from those lease sales? Please also provide net revenue from lease sales in 2008, 2009, and 2010.
  3. How does OMB account for, and what methodologies does OMB use to measure, future revenue from all sources of domestic energy? Can these numbers be broken down by the type of energy resource?
  4. What has been the revenue generation from renewable energy for FY 2007, 2008, 2009 and 2010, and what is OMB projecting to be the revenue in 2011, 2012, 2013, 2014 and 2015? Also, what has been the total amount of grants and subsidies paid out to renewable energy each year, and what are the projections for the noticed years?
  5. What companies and Venture Capital firms (including their start-up investments) are the top 10 recipients of federal grants, loans and subsidies for renewable energy, and what is the dollar figure for each firm from years 2007 through 2010?
  6. How does OMB account for a fundamental transition from wealth-generating energy industries to massively-subsidized energy industries in its analysis of revenue generation and our fiscal situation?
  7. For the American Recovery and Reinvestment Act, what was the total number of projects that received categorical exclusions or reduced environmental review under the Act? What is the percentage of total projects?

Vitter said months ago that lost revenue from offshore drilling is exacerbating the federal deficit. With a debate looming over the debt ceiling, he’s now pressing his case.

“As the United States rapidly approaches its debt ceiling, we appreciate your timely response to this letter to inform all members of Congress how the federal government is harnessing or limiting its energy sector’s ability to contribute to our overall economy,” Vitter and Landry wrote in their letter to Lew. “These figures and statistics would go a long way to helping us all make a clearer, more informed decision.”

COMMENTS

  • Scope

    Our VA Governor campaigned on the lease sales for drilling off the coasts of Virginia. It would have added much revenue to the state, and jobs. The O’s admin first delayed the already in the hooper date for selling the leases, they had people lined up waiting to purchase those leases. After the BP spill, the possibility was taken off the table. If I am not mistaken, the revenues from the leases are shared by the state and the federal government. Our Vladimir could weigh in on this very articulately and eloquently. He’s in the business, and knows more than the feds.

    • izoneguy

      Americans have to own up to the fact that they have let the socialists and labor unions destroy our manufacturing base and thus our ability to make money.
      Selling oil and coal is about the only play we have left to dig ourselves out of this mass induced economic stupor. It won’t be easy to fight the eco-nazis but I would rather fight them then China or Russia in the future.

      • carolina

        Beyond that, we are keeping our current account in a deficit and subsidising some of our enemies.
        The whole oil supply impact on our national wealth and national security is a no-brainer IMO.
        Thank goodness the repubs can ask the questions – and they WILL get answers.

      • carolina

        Beyond that, we are keeping our current account in a deficit and subsidising some of our enemies.
        The whole oil supply impact on our national wealth and national security is a no-brainer IMO.
        Thank goodness the repubs can ask the questions – and they WILL get answers.

        • Scope

          but the way I see you’re “well DUH” in response to the comments above you sound kinda like the comments were redundant or not the brightest. Please can you not do that kind of thing. It makes you sound like you are trying to be smarter and much more intelligent than the rest of us. Your comment, not being a reply, would have had a greater impact. Have I read your comment in the wrong way?

          • carolina

            Maybe I was overly enthousiastic. No disparagement meant at all. I am in complete agreement!

          • Scope
          • carolina

            Maybe I was overly enthousiastic. No disparagement meant at all. I am in complete agreement!

      • al003

        To work ourselves out of the financial hole we are in we need to use every energy method we have. We must work ourselves into energy independence and quickly. We have plenty of oil – all we have to do is get it to the surface and through the refinery. We cannot continue to fund our own Jihad from Saudi Arabia with oiil money.
        We also must get back into Nuclear in a big way and as fast as possible. It is completely unbelievable that we were the world leaders in Nuclear Technology 30 years ago, and now we are almost out of it and the rest of the world are still using our 1970s technology. Go figure.
        This wind and solar is still a pipe dream and will remain so for another 25 years for solar and forever for wind.
        Right now as Sarah says ‘Dig Baby Dig”.

        • boxedquad

          We need to get 18% or more from all wind and solar projects, right off the top. Like a sales tax on gross receipts, they have no depletion allowance only asset offsets in depreciation. A land use rental is not linked to gross earning, according to a BLM rep at a local meeting this week.

          If a project is in Fed Lands, Tax’em.

          Cost benefits are so marginal now that this payback to the people will just do them in. and in most cases only justified by tax credits. and the selling of tax credits, that is why I got out of wind business years ago, It made me sick. Give fed lands to states, lakes, rivers, and irrigation projects.

  • http://impudent.edublogs.org/ kyle8

    He could just ask Julian Assaunge.

  • http://impudent.edublogs.org/ kyle8

    He could just ask Julian Assaunge.

  • gwalt

    But do you sincerely believe O-Bo will comply? Salazar? Even Lisa Commie Jackson?
    This is the type of story that needs to be hammered by news media. RS and many many others do a great job of providing us with facts. With no other pressure, O-Bo will just Barokey Dokey along.

    Let’s talk above the media.

    Hold press conferences and control the conversation. Keep it focused and don’t let the press allow the “environment”, “BP Fiasco” blah, blah to enter conversation. Yes, the BP spill was a disaster. So was Continental/Delta/American Flight XYZ crash—we didn’t ban airplanes..

    OR:
    Use local affiliates more and leave the networks completely out of the national conversation. (Hmmm—nothing like the bee-otches getting scorned).

    We need to wage a PR war. Limbaugh today said it correctly: Whomever is selected as the 2012 Republican nominee they will be running against the media, not O-Bo (or whomever the Dem nominee will be). This is UN-acceptable. We’ll raise a billion—-and they (Dems) will get 3-5 billion in free PR from the Liberal State Media.

    Erick, Moe—-get Breitbart—-get RNC to hire Fleischer. Anything. Something!
    We’ll help with a PR (billboard, TV, online) campaign to embarrass the media or go around them.

  • cactusjack

    For years – generations – the Northeast loved to deride the Lower South as a backward place. Nothing could have been further from the truth starting from the 1960s. Some of the smartest people on the planet, most of them engineers, were congregating in Houston and New Orleans, figuring out how to put American astronauts on the Moon (they did it) and drill offshore in federal waters, beneath the ocean floor, with technology that still amazes. These were truly areas of American technical excellence that brought returns many times to the US economy, until O decided to dismantle manned space shots and offshore drilling. When these things get shut down, the loss greater than the revenue return on investment, is the loss of the talented people. They go into real estate in Florida. They go work for their brother in small business in Colorado. Nothing wrong with that per se, but we lose them and their smarts by not having them in the best place for highest and best use thereof. And as history shows from the 1990s, when they drift off in their thousands from shut down rigs, out of business drilling operations, we (the US economy) never get them back. There’s the tragedy and its happening again. Thanks, Obama.

  • cactusjack

    For years – generations – the Northeast loved to deride the Lower South as a backward place. Nothing could have been further from the truth starting from the 1960s. Some of the smartest people on the planet, most of them engineers, were congregating in Houston and New Orleans, figuring out how to put American astronauts on the Moon (they did it) and drill offshore in federal waters, beneath the ocean floor, with technology that still amazes. These were truly areas of American technical excellence that brought returns many times to the US economy, until O decided to dismantle manned space shots and offshore drilling. When these things get shut down, the loss greater than the revenue return on investment, is the loss of the talented people. They go into real estate in Florida. They go work for their brother in small business in Colorado. Nothing wrong with that per se, but we lose them and their smarts by not having them in the best place for highest and best use thereof. And as history shows from the 1990s, when they drift off in their thousands from shut down rigs, out of business drilling operations, we (the US economy) never get them back. There’s the tragedy and its happening again. Thanks, Obama.

  • http://www.thehayride.com MacAoidh

    …Rep. Jeff Landry, whose district encompasses the southeast and south-central Louisiana coast which is heavily dependent on the oilfield for its economic survival, co-signed that letter with Vitter.

    And Rep. Charles Boustany, whose district is southwestern Louisiana, also lit into the Interior Department today on offshore permitting.

    http://thehayride.com/2011/01/boustany-tears-into-obama-administration-on-offshore-oil-permits/

    The Louisiana delegation is making a full-court press on this issue, because the oilfield firms which have been savaged by the Obamoratorium have been eating up their operating capital and lines of credit in an attempt to hold onto their employees and ride this storm out. They are rapidly running out of ability to do so, and mass layoffs are going to result soon if the administration doesn’t start moving on this. The effect on Louisiana’s economy will be devastating, and you can bet that oil prices are going to skyrocket soon as a result.

    http://loga.la/loganews/?p=887

  • horizon3

    For lying and misstating facts, The better avenue to find out just how much revenue the Feds and States lost due to the drilling bans, loss of lease sales, etc., would be to ask the API and the individual oil companies.
    They know exactly to the cent how much was paid out in taxes, lease fees, etc. for previous years, and the majors will have it in their annual reports.

  • popster

    and turn around and sic the EPA on them with a flock of new regulations.

  • analyst

    To me this information should not even require a freedom of information act request from an ordinary citizen, it should be avalable to any and all at any time. The fact that congress has to make a special request which can be denied is just plain rediculous. This is transparency?!!!

  • http://vladenblog.tumblr.com Vladimir

    I’d expect the number is $12-15 billion per year.

    The number used to be easy to find on the old MMS website. Cosy relationship and all.

    I think the estimate of loss of production per the EIA, 220,000 bbls/day, is conservative. I think the real loss may be greater.

    These idiots don’t realize how destructive to the infrastructure their actions are. Or maybe they do.

    I will be intrigued to see the revenue projections from wind. I have my own projections, in round numbers. All round numbers, round like goose eggs.

    The lack of seriousness that this administration is bringing to the problem is exemplified by the fact that they’re frittering away time, money, energy & manpower addressing non-existent problems, like safety and environmental threats on the shelf (waters less than 600 ft).

    They have permits hung up over an esoteric reservoir engineering question called “Worst Case Discharge”, (WCD) determining the theoretical volume of oil that could hit the water in a catastrophe. (Bear in mind that a total of 1,800 bbls has hit the water from all the well blowouts since 1970, some 42,000 wells. That’s a few days worth of natural seepage.)

    The BOEMRE approach to WCD is numerical simulation — computer modeling, the ultimate GIGO exercise. Lacking trained oil and gas engineers to check industry’s submissions, they have been cross training their wind energy experts to help out.

    As I said, they’re not serious. They’re either ignorant, or acting in bad faith. Or both.

    Good on Senator Vitter, and good on my friend Mr. Landry.

  • miroco

    Perhaps the only tool that is likely to work on the morons on the left. They question the obvious, we give a serious answer, we are the dumb ones, they twist the answers. The answer must always be, “Are you people really that stupid? I prefer, “Anybody found a cure for lunacy yet.” No computer is needed, we drill, we win. They want us to lose, even to our enemies, so they get power. The only thing more despicable than a leftie is two lefties.

  • williamjameson

    Saw a video last night with Pelosi ranting that Bush never developed an energy policy. True but Pelosi took over as speaker in 2004 and what did she do to garner the support and work on a bill. The Speaker’s role is to work with both sides, not become a statist control freak who only sees Blue as a solution.

    Unleaded prices doubled in 2004 then doubled again in some states in 2006. Pelosi can blame Bush up till she took over, nah, the markets move in natural rhythms till wallstreet gets greedy and we did have an oil friendly potus. But did Pelosi care what the poor and middle class paid for gas back then?

    Obama just completed his first 2 years with no energy policy and he had a Super Majority. Its quite obvious this man is no multi-tasker because all his election rants about Bush have become business as usual for Obama. Obama has no energy policy and no plan to make the Gulf work for our energy needs. He’s listening to Enviro-Fascists like Energy Secretary Steven Chu and the minions with the California state of mind thinking $7 unleaded will solve our energy push towards alternative fuels. The shift to alternative sources will take far longer than these choads care to admit. And we can’t punish the Gulf workers nor the public while they twiddle their thumbs.

    Remember its the democratic party that wanted CORN ETHANOL while the right said don’t use a needed food source, use Sugar because its more abundant and cheaper. Nope they followed the mindless and learned the hard way. The good news is we now have other alternatives but oil is still the main source. Don’t expect that to change this decade.

  • Common_Cents

    the only thing we hear about oil is that it is “dirty, it makes you SICK!” according to Dingy Harry (i think he may have drank some gasoline during his developmental years).

    Especially in this environment, the economic advantages of oil should be stressed and how attacks on our oil industry will end up costing us all in more deficits/borrowing.

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