The Government Accountability Office is out with its latest report on areas of the government that are at a high risk for waste, fraud, abuse and mismanagement. The newest addition to the list is the Department of Interior’s management of federal oil and gas resources. The problems with the program could be costing taxpayers billions given that oil and gas resources are a significant source of federal revenue. From the GAO Report (PDF):
Revenue collection. In 2008, GAO reported that Interior collected lower levels of revenues for oil and gas production than all but 11 of 104 oil and gas resource owners whose revenue collection systems were evaluated in a comprehensive industry study—these resource owners included many other countries as well as some states. GAO recommended that Interior undertake a comprehensive reassessment of its revenue collection policies and processes. Interior has commissioned such a study in response to GAO’s September 2008 report, which it expects to complete in 2011. The results of the study may reveal the potential for greater revenues to the federal government. GAO also reported in 2010 that neither BLM nor MMS had consistently met their statutory requirements or agency goals for oil and gas production verification inspections. Without such verification, Interior cannot provide reasonable assurance that the public is collecting its legal share of revenue from oil and gas development on federal lands and waters. In addition, GAO reported in 2009 on numerous problems with Interior’s efforts to collect data on oil and gas produced on federal lands,including missing data, errors in company-reported data on oil and gas production, sales data that did not reflect prevailing market prices for oil and gas, and a lack of controls over changes to the data that companies reported. As a result of Interior’s lack of consistent and reliable data onthe production and sale of oil and gas from federal lands, Interior cnot provide reasonable assurance that it was assessing and collecting appropriate amount of royalties on this production.
During this recent debate about the deficit and cutting programs that help regular people, it is important to keep in mind that not only are the oil companies receiving massive tax subsidies directly from the government, but, thanks to lack oversight and bad lease agreements, the federal government is likely getting a far smaller share of the domestic oil revenue than it should.