Oil and gas companies lie and trick taxpayers with cleanup bill


In our mind, we envision an oil well pumping oil faithfully for decades after it is drilled. In reality, wells created by hydraulic fracturing often occur within a few years or even months. The same goes for non-natural gas wells. What to do? Drill more wells and when they stop producing, pack your gear and go drill on the road, around the corner, or somewhere over the rainbow.

Today, there are millions of abandoned wells across America, many of which were abandoned during the hydraulic fracturing boom of the past 20 years. While many states require oil and gas companies to post a bond to cover the cost of their shutdown, in practice that bond is often a small percentage of the actual cost. The Guardian reports that the state of Colorado, one of the largest oil and gas producing states, requires a bond of as little as $ 10,000 when the actual cost is often $ 140,000 or more. The cost of cleaning up millions of abandoned wells in Texas is estimated at $ 1 billion.

Here’s how the game goes. GigantaOil drills a well and posts a bond. He carries this obligation as a liability on his books, but after a few years of peak production he sells the well to Acme Oil Corp. Acme takes on the liabilities, but guess what? Acme in turn sells to Bottom Of The Barrel, LLC, a shell company that drains the last drops from the well, then folds up its tent and vanishes overnight, leaving nothing but worthless assets behind.

Now there is no more money to pay to decommission the well, so who gets stuck with the cleanup? Yeah, you guessed it. The taxpayers who have already shelled our millions in tax breaks to GigantaOil in the first place. Is it a big country or what?

Get paid from both sides

The myth in America is that oil and gas is what makes America such a great nation. Oil production and oil reserves are a matter of national security and let’s face it – without them the whole economy would come to a halt, throwing millions out of work and shutting down utilities like clean water and electricity. sewers. Civilization as we know it would come to an abrupt halt.

Oil wells on public land in New Mexico. Image courtesy of the Bureau of Land Management.

But the problem is, the oil and gas industry has used its economic power to suspend the laws of economics. They manage to avoid taxes on most of their income through a convoluted network of special tax code provisions. Mr. and Mrs. America don’t need a thousands of page IRS code with a multitude of rules and regulations to interpret all of these provisions, but the fossil fuel industry certainly does. It’s an integral part of his way of doing business.

The types of free market out there take great pleasure in telling us how efficient the market is, but that’s only true if it’s managed fairly. The fossil fuel hordes have played the system to the point that it is a “face you win, face you lose” proposition that ignores the pollution resulting from the economy’s base on oil and gas (and, to a lesser extent, coal). So yes, we understand. Markets are efficient and Adam Smith’s “invisible hand” has magical powers, but when free traders refuse to include all the costs of doing business in their grand economic calculation, they commit a monstrous fraud on the company.

The infrastructure bill

The US Congress is currently considering new legislation that would inject billions of dollars into the economy to improve US infrastructure. This is a good thing, no doubt. But it will also provide a lot of public money to clean up abandoned wells that release toxins into the environment all over America.

The legislation includes a plan to inventory, measure and track methane emissions and groundwater contamination associated with orphan wells – abandoned wells with no identifiable owner. “People on the surface think it’s a good environmental thing… but the devil is in the details,” said Megan Milliken Biven, consultant and former program analyst at the Bureau of Ocean Energy Management. The Guardian. She says it’s actually anything but. “It’s an invoice for the bosses,” she said.

$ 2 million is earmarked for the Interstate Oil and Gas Compact Commission, an organization closely linked to the fossil fuel industry. The bill allows the group to consult with the federal government as it awards billions of dollars in grants to states to plug, repair and restore these orphaned wells. The infrastructure bill treats the commission in a harmless manner, granting it duties and access to federal research and development funds as if it were a formal government entity.

The problem, The Guardian says, doesn’t it. He was initially sanctioned by the government. But according to one InteriorClimate investigation, in 1978, the Justice Department recommended that Congress divide it on the grounds that the group had turned into an advocacy organization. Its influence, through a network of members similar to the right-wing American Legislative Exchange Council, has reached its tentacles in state legislatures across the country to promote cut-and-paste legislation that benefits oil and gas interests. .

Uncle Sugar to the rescue

Recently, IOGCC Vice President Wayne Christian was recorded telling his supporters, “If the bill passes and we are about to pass it, $ 25 million will come.” in Texas to clean up abandoned wells and amounts greater than that in the future. So we’re going to help the energy industry with some of those billions of dollars. “

Christian is an avowed climate denier and head of the Texas Railroad Commission, known for its close ties to the oil industry. The current chairman of the IOGCC is Oklahoma Governor Kevin Stitt, who received more than $ 240,000 in campaign donations from the oil and gas sector in 2018. He is known to have urged the Environmental Protection Agency to stripping native tribes of regulatory authority over their lands and for co-signing a letter urging the Biden administration to resume leasing oil and gas on public lands.

What in Oklahoma causes him to kiss idiots like Stitt and the dastardly Scott Pruitt who would rather see humans vanish from the face of the earth than lose a dime in oil-soaked profits? ? Don’t its citizens understand that the dead make extremely poor customers?

On its website, the IOGCC calls itself a “multi-state government agency,” but it also claims an exemption from public information laws. Although the group claims not to lobby, according to ProPublica, He has spent around $ 100,000 on Capitol Hill since March 2019 lobbying for favorable well plugging programs.

Jesse Coleman, Principal Investigator at the Monitoring Group Documented, has been investigating the IOGCC for years and is surprised to see a pseudo-agency identified as arbiter of the orphan well program. He calls this an “even more powerful and direct role” than the one the group usually gets, which he says is problematic because no government entity oversees IOGCC.

“Any actual amount of electricity going to this organization, which is funded by the oil and gas industry, [strips] the power of real government agencies that have oversight and accountability, ”Coleman says. Don’t worry, says Senator Ben Ray Luján of New Mexico, who co-sponsored the legislation. He explained that according to the proposal, the role of IOGCC is to provide technical assistance and consultation. “Consultation is separate from monitoring,” Luján’s office said, defending the need for IOGCC’s position in cleaning up orphan wells.

This may be true, but why do taxpayers give all money to an avowed climate denier who is little more than a spearhead in the oil and gas industry? When will we stop letting madmen run the asylum?

Get along to get along

The National Wildlife Federation and the Environmental Defense Fund have approved the current bill. John Goldstein, senior director of regulatory and legislative affairs at EDF, recounts The Guardian his group was not worried about the influence of the IOGCC. “We didn’t want to pass up this opportunity to get this funding,” he said.

Rob Schuwerk, executive director of the North American office of Carbon Tracker, says: “The question is, does this then make people not plug the wells because they think the federal money will be there for it? He adds that plugging orphan wells will not eliminate methane emissions in the oil and gas sector on a scale close to the scale needed to avoid the worst effects of the climate emergency, the scientists stressed, as long as the drilling continues.

“I think [lawmakers] really need to look at this and make sure they address the issue of incentives and moral hazard, not just money to plug the wells, ”said Schuwerk. “There should be a good misunderstanding.

Level the playing field

In other words, let’s not just give the fossil fuel industry everything it wants. Those who pray on the altar of free market theory claim that all they want is a level playing field, but that’s a lie. They want the rules of the game to be as favorable as possible. At some point, the best interests of the community as a whole must come first. “There is no time like the present”, as my old Irish grandmother liked to say.

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