WASHINGTON, Jan. 19 (UPI) -- The Office of the Inspector General for the Department of Interior released Thursday an investigative report on the lack of price thresholds in offshore leases Thursday.
The report was raised Thursday when the Senate Committee on Energy and Natural Resources heard testimony on the 1,032 oil and gas leases in the Gulf of Mexico signed during 1998 and 1999 that omitted language implementing price thresholds.
Stephen Allred, assistant secretary of land and minerals management, said the omission was a "bureaucratic oversight" while Inspector General Earl Devaney said evidence has surfaced suggesting someone was directed to remove the price threshold clause.
However, Devaney added, even if direction were given, there's still no evidence proving it was done with malicious intent or even with any knowledge of the consequences. Both Devaney and Allred insisted that neither the oil companies nor the Minerals Management Services realized the costly mistake when the lease was signed.
Regardless of where the blame lies and whether it was an oversight or intentional omission, the lack of price thresholds has allowed oil and gas companies to keep their royalties, costing the U.S. government and taxpayers an estimated $10 billion in lost revenues according to the Congressional Budget Office.
Suggestions on resolutions from committee members ranged from breaking the lease agreements with uncooperative companies to claiming a mutual mistake to negotiating retroactive payments and revising the lease agreements. A bill in the House to reduce subsidies for the oil and gas industries and recover those lost royalties was approved Thursday though it is opposed by the Bush administration. Further hearings will be held to determine who's accountable and what should be done to remedy the situation.
