Feds worried about lost revenue from offshore drilling incentives
A congressional proposal to give coastal states a greater share of government royalties tied to oil and gas drilling would cost taxpayers more than $49 billion over the next three decades, according to a new analysisset to be released Friday.I would apply the benefit to all coastal states and give them an incentive to encourage offshore drilling. Using dynamic scoring such a plan would actually increase revenue to the federal government because it would open up several new sites for drilling. The only impediment to such a plan would be the anti energy left wing of the Democrat party.
The assessment, by the left-leaning Center for American Progress, takes a close look at the price tag for royalty sharing legislation being advanced by Sens. Mary Landrieu, D-La., and Lisa Murkowski, R-Alaska.
Their bill, which received a hearing in July, aims to put coastal states that support energy development near their shores on nearly level footing with inland states that generally claim 50 percent of the revenue from oil and gas production on federal lands within their borders.
Existing law will give four coastal states — Alabama, Louisiana, Mississippi and Texas — 37.5 percent of oil an gas royalty revenue on most Gulf of Mexico leases beginning in 2017, but it is capped at $375 million annually. Known as the FAIR Act, Landrieu and Murkowski’s bill also would allow the program to start right away and would phase out the cap on payments by 2024.
Landrieu and coastal governors say the approach is equitable, given that their states provide the infrastructure to support nearby offshore oil and gas development, while bearing the risk when things go wrong.
“Our states are serving as platforms for the production of (offshore oil),” Landrieu said during a June hearing on the issue. If coastal states can keep a greater share of offshore oil and gas revenue, they can use that money to rebuild eroding shoreline and protect coastal communities from storms, she said.
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But the Center for American Progress says the measure “is anything but fair.”
The legislation “would result in a significant and arguably inequitable windfall for a handful of states,” said the center’s report.
The Congressional Budget Office estimated the potential price tag for Landrieu and Murkowski’s bill is $6 billion, but that projection only went through 2023, before it would completely lift limits on state payouts.
The Center for American Progress’ $49 billion pricetag is calculated through 2040.
The group projects that under the bill, federal payments tied to energy development would rise to nearly $2 billion per year by 2025 — just for Louisiana alone. That’s roughly 33 times more than what the average energy-producing state — both inland and coastal — is currently collecting.