Within a few days, Congress is likely to cast votes on hastily written legislation that responds to the public's demand for new sources of oil. This is certainly understandable in light of the displeasure expressed by millions of Americans in the last year as we have struggled with historically high gas prices.
But I hope that Congress will employ at least a little long-term thinking when they cast their votes, ensuring that good policy is afforded a seat at the table alongside expedient politics. I want to call attention to this historic opportunity to accomplish multiple public benefits if indeed Congress is prepared to capitulate to the loud and repeated chants of “drill, baby, drill!”
Oil belongs to the people
The oil itself, which sits off our continental shelf, belongs to the American people. Most people already understand this, but in years past our elected leaders and the public itself have acted as if they did not. As legislation is crafted and voted on, legislators, candidates and the public must not forget there is great value in the public asset we are apparently prepared to allow to be privatized.
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In 1995 we had the opposite problem of today. Oil was cheap – less than $30 per barrel “cheap!” At those prices, oil companies were unwilling to invest in exploration and development of known deep water reserves in the Gulf of Mexico. As a result, Congress passed the “Deep Water Royalty Relief Act” to provide incentives for oil companies to drill our oil without having to pay royalties to the taxpayers who owned the oil. That is, we gave them up to 87 million barrels of oil for free per project before we received any royalties.
Previously, these royalties (12 to 16 percent of gross revenues) were an important part of our national budget as well as the sole major funding provided to the Land Water Conservation Fund (“LWCF”), which provides money for national parks, national forests and local parks. In fact, nearly every county in America has a park that has benefited from these funds over the years, and the promise of oil royalty proceeds funding parks across the nation was a major consideration in our state and federal governments allowing expansions of drilling operations in the Gulf of Mexico.
Due to “mistakes” and questionable business practices that have been sparingly covered in the press the past three years, contracts were inappropriately written and extended by our Department of the Interior. Those contracts continued the policy of forgiving royalty payments for continued production, even as gas reached record prices and profit margins soared.
Simultaneously, funding to the Land and Water Conservation Fund dropped from its high of nearly $1 billion in 2000 to less than $43 million proposed in the president's budget this year. These are the funds that provide acquisition money to expand national parks from Yosemite to the Great Smoky Mountains, and improvement money to build ball fields from Murphy to Manteo.
Specifically, the lack of LWCF funding in the past two years has prevented the U.S. Forest Service from buying a critical access point for the public to get to Catawba Falls in McDowell County for a top priority expansion of Pisgah National Forest. In the Uwharrie National Forest, the United States Forest Service has been unable to buy a tract that connects three fragmented properties already owned by the forest service and which boasts the highest point in the forest, a natural population of rare sunflowers, and a critical portion of the 22-mile long Historic Uwharrie Recreation Trail. In the Roan Mountain Range near Asheville, the forest service has similarly been unable to secure a high priority and spectacularly beautiful parcel of land that is where the Appalachian Trail intersects with the Over Mountain Victory Trail – a Revolutionary War landmark where Militia patriots from the South tracked down British soldiers en route to King's Mountain.
All three of these projects were applied for in 2008 and turned down by the U.S. Forest Service due to lack of funds from the program that is designed to support such acquisitions . There are similar stories from the Blue Ridge Parkway to our National Seashore parks near Hatteras.
In fact, the federal government has made almost no investments in national or local parks in North Carolina in several years as a result of LWCF funds not being available, even though many popular parks and forests in this state have been documented to be overused and in dire need of expansion.
For some perspective, the North Carolina General Assembly provided more money for park acquisitions in the state of North Carolina just this past session than President Bush has proposed be made available for the entire country in 2009.
Don't undervalue our oil
Add to this insult the injury of this week's Department of the Interior report focusing on gross conflicts of interest found between those responsible for administering the royalty contract program and the oil companies themselves.
The report released Sept. 10 states that staff in the agency were taking “consulting fees,” special trips, and drugs from oil companies during the time periods when “mistakes” were made in royalty contracts that effectively prevented more than $7 billion from being paid to U.S. citizens and the Land and Water Conservation Fund.
With most oil companies' profit margins seeming pretty healthy right now at a time that most North Carolinians personal budgets are not, congressional and state leaders must not settle for the first offer given to take our oil.
Please consider what the real value of this asset is before privatizing it, and ensure that some of the profits are shared with the people of this state and country.
For starters, let's put back the money we lost from the Land and Water Conservation Fund over the last decade from our ridiculously generous oil company contracts so that our national and local parks will continue to flourish.