Sex, lies and oil and gas: Bad mix for U.S.

At a time when most Republicans and many Democrats are hopping aboard the bandwagon to promote offshore exploration for oil and gas, the U.S. Interior Department's watchdog released a report whose lurid details might embellish the plot of an X-rated video.

Employees at the U.S. Minerals Management Service – which is supposed to collect more than $11 billion in royalties from domestic oil and gas producers – were a party-hardy crowd. They “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relations with oil and gas company representatives.”

Earl Devaney, inspector general for the department, also noted that “sexual relationships with prohibited sources cannot, by definition, be arms-length.”

No indeedy – not without some difficult gymnastics, anyway. But Mr. Devaney's larger point is indisputable: Government employees charged with overseeing the work of private companies must not cross a broadly defined ethical line intended to discourage all sorts of hanky-panky – physical as well as fiscal.

That line didn't do the job when at least 19 workers, about a third of the agency's employees, socialized with and took gifts from employees of companies the agency did business with. The energy companies pay the government royalties not in cash, but in gas and oil the agency sells on the open market. It's supposed to bring in more money than direct payments.

Obviously that arrangement needs a close look. The agency must make sure the companies pay appropriate royalties for what they extract from federal property, including the outer continental shelf.

The agency also draws up leases for offshore drilling, so a hard look is in order there, too. Earlier this year, Mr. Devaney reported that some oil companies had been allowed to reduce the sums they were supposed to pay in in-kind royalties. One company was able to reduce its payment by claiming a math error in its original bid.

Lots of people have made mistakes in this eye-popping mess, including Bush administration officials who have cozied up to oil, gas and other energy interests as well as members of Congress who failed to follow up on earlier problem reports.

Whether this report will slow the rush to lift a moratorium on offshore drilling for oil and gas and expand the search for energy supplies is doubtful. Many Democrats are joining their Republican colleagues in rushing to drill quickly and widely despite persuasive studies that more exploration along our coastlines will do little if anything to reduce gas prices. This is, after all, an election year.

The late-night comics, of course, will offer bawdy suggestions about these employees' interpretation of what “Drill here, drill now” means, but for taxpayers, there's no doubt who in this sordid episode has gotten the shaft.