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The Real Oil Shakedown is of US Taxpayers

Pete Altman

Posted June 23, 2010 in Curbing Pollution, Moving Beyond Oil

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Maybe you’re like me and you are starting to get a little motion sickness trying to keep track of all of the back and forth with Congressman Joe Barton’s on again/off again apology to BP

But there’s no mistaking the fact that Joe Barton’s apology to BP for what he called a “Chicago-style $20 billion shakedown” landed him in a lot of trouble.

However out-of-touch Barton must be to go apologizing to the company responsible for the biggest oil spill in US history, its worth pointing out that Joe is also being used as a fall guy here. In truth, the supplicating Congressman from Texas  was just channeling colleagues who expressed the same or similar views. And what’s really appalling is that the real shakedown – how much US taxpayers fork over to oil companies to drill in the Gulf (and other places) – has been largely ignored. 

Now, it can be difficult to focus on the bigger picture when you have a member of Congress pleading forgiveness from the company whose Chairman referred to Gulf residents as “small people” only the day before. (A comment which provided a unique insight into the corporate culture capable of making decision after decision that put profit over fundamental worker safety and environmental concerns, and led to the disaster.)

If the victims are the small people, that must make the perpetrators the Big People (BP)!

But let’s not pretend this begins and ends with some tongue-tied board chairman at BP and Joe Barton It hasn’t only been Joe Barton defending the BP. As Eugene Robinson wrote in the Washington Post,

Joe Barton is not alone. The Texas congressman's lavish sympathy for BP -- which he sees not as perpetrator of a preventable disaster but as victim of a White House "shakedown" -- is actually what passes for mainstream opinion among conservative Republicans today.

As Robinson points out, the day before Barton apologized to the Big People (BP), the 115 member Republican Study Committee issued a statement “Chicago-Style Political Shakedown” condemning the escrow account.

Apparently some people in Congress aren’t convinced that BP should take responsibility for cleaning up its own mess. Earlier this month, House Minority Leader John Boehner declared that "I think the people responsible in the oil spill--BP and the federal government--should take full responsibility for what's happening there.” And since taxpayers – aka more of those small people – pay the bills, well isn’t it nice to know that Congressman Boehner’s got his eye on you … and your pocketbook.

Then there’s Congressman Michelle Bachman, who also sides with big people (and BP!), complaining last week that the escrow account is really a “redistribution-of-wealth fund.”

Well, duh! The whole point is to take some of BP’s wealth and make sure it actually gets to the “small people” whose lives were trashed by BP.  They are after all, paying for the aftermath of BP’s mistake.

That mistake is bringing renewed focus to the ways in which the ‘small people’ all over the country bear the burden. And not just at the pump, and not just to keep a military capable of protecting access to oil sources in the Middle East.

And the welfare-style handouts to Big Oil really do add up. 

The extent of US taxpayer subsidies for the oil industry has been carefully documented by the GreenScissors Project,  which issued a new report recently documenting  over $30 billion in subsidies over a five-year period.

Several subsidies are particularly relevant to the Gulf region and the current spill. For example, we protect oil companies by limiting “no fault” liability for economic damages from an oil spill to $75 million, a figure that was probably exceeded in the Gulf in April, 2010.  Once the $75 million cap is exhausted, someone with an economic injury can either get in line for a payout from the oil spill fund, paid for a small tax on each barrel of oil produced, or take her chances in court.  After the Exxon Valdez spill, some litigants waited 20 years to be paid.

For some perspective on how far $75 million doesn’t go when addressing economic damage claims, as Sam Stein pointed out on HuffPo, ExxonMobil

was found responsible for $3.8 billion in economic damages and clean-up costs - and the Gulf Coast oil spill is feared to be at least 6 times worse in volume.

And its worth mentioning that many felt that ExxonMobil got a big break from the courts who cut the damage award down significantly before arriving at $3.8 billion.

And then there is “royalty relief” stemming back to the 1990’s, when Congress created a loophole letting oil companies off the hook for paying royalties on oil produced from federal waters. The idea was to incent oil drilling in the Gulf when oil prices were low. But when oil prices went back up, they didn’t bother closing the loophole. The General Accounting Office estimates that taxpayers have lost tens of billions in royalties - $53 billion, in fact, thanks to this loophole.

There are other ways we give oil ridiculous breaks. Big and ridiculous enough to be featured on Stephen Colbert who picked up the LA Times story that foreign-flagged drilling vessels don’t have to comply with US safety rules. This allows them to maintain lower staffing levels, and skirt the Coast Guard’s full 2-3 week safety inspection. Instead, rigs like the Deepwater Horizon, which was flagged in the Marshall Islands, get 4-8 hour long inspections. Even Colbert thinks we can do better:

Look, I'm no fan of regulation, but I believe an oil rig inspection should last longer than a Phish concert.

But the biggest subsidy of all for oil companies is that they aren’t responsible for the impacts from the use of their products – global warming pollution and all the costs it will incur as our planet slowly warms.

It is time for Congress to get big oil’s drills out of taxpayer’s wallets. Drop the subsidies – all of them, including free global warming pollution – and we’ll be ahead of the game in reducing the risks of future oil spills and moving the US toward a clean energy economy.

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Comments

Gael KirtleyJul 2 2010 10:29 AM

The problem with your, and the federal governments position on the $20 Billion escrow acount is that BP had already admitted responsibility and was already paying damage claims. The objectional part of "forcing" the account is that it was not shown to be necessary and comes off as 'strong-arming' and 'grand-standing'. Had BP been saying that they were not going to pay claims, then I would totally be behind our government make BP do the right thing, It is a much harder sell when BP was already doing it.

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