Wednesday 23 June 2010

U.S. Government Oil Royalties Of $37,125,000 A Day

What I am explaining here I urge you to tell any and every one you know who lives in the Gulf Coast. Please urge them to contact their City, County or Parish, and State governments, as well as their House Representatives, and Senators.

According to the government’s own website,, “U.S. Crude Oil Production” is “4,950,000 barrels/day” or, at 12.5% royalty, $37,125,000 a day that the United States takes in.

This analysis is very simple. According to, the low average royalty to the owner of land is 12.5% on all oil that is pumped out of that land, and this amount is assessed at the wellhead by the owner of the land.

First this means that the United States Government legally has a pecuniary interest in the output of oil wells. There is an amount of revenue being had by the United States government as a partner by royalty charged on the production from every well drilled.

Second, there is no excuse for the United States Government, who is making money on resources that belong to the people of this nation, not to spend these royalties on cleaning up an accident related to this resource.

Third, the total estimated amount of royalties received by the United States Government from all oil production across America, at 12.5% royalty, 60 days into this spill, and that could have been spent each day this Oil Spill Crisis in the Gulf has gone on, is at least $2,227,500,000.

Fourth, and why this legal liability rests on the United States Government more than ever, is directly from the United States Government’s lease agreement:

“Sec. 6 Royalty Production. (a) The Lessee shall pay a royalty as shown on the face hereof in amount or value of production saved, removed, or sold from the leased area. Gas (except helium) and oil of all kinds are subject to royalty. The Lessee is liable for royalty payments on oil or gas lost or wasted from a lease site when such loss or waste is due to negligence on the part of the operator of the lease, or due to the failure to comply with any rule or regulation, order, or citation issued under the Federal Oil and Gas Royalty Management Act of 1982 or the Act. The Lessor shall determine whether production royalty shall be paid in amount or value.” (Emphasis mine, and the form is available here

Note how the government estimates of the oil flow are going up and up and up? With the government making 12.5% on the oil in the gulf at this time, some 1,845,000 barrels of oil at 60 dollars a barrel, means the government receives $13,837,500 from the oil sitting in the Gulf of Mexico. This monetary amount from the oil that is in the gulf is paltry in comparison to what is needed, but even this amount hasn’t been spent by the United States Government to aid the Gulf Coast.

Instead everything has been “BP is the responsible party....BP will pay for everything” and “I have my boot on their neck,” the unnecessary delay a direct and proximate cause of the exacerbation of this spill, because these statements demonstrate that the United States Government isn’t spending a dime of their own money, even though the United States Government holds this direct and actual pecuniary interest in every oil well per their own lease agreements terms.

There’s been a particular emphasis on the notion of the big oil companies and their huge profits, and how BP abused process and procedure etc., taking unnecessary risks by putting profits before safety.

As a 12.5%, or more interest holder in the well, the United States Government is a responsible party. Minerals Management Service is tantamount to being a building department in a city, looking over building plans to issue permits according to meeting the city government’s specifications. The United States Government failed to enforce the specifications here, and there is a liability upon government agencies and the particular individuals who failed to provide oversight and guidance to the person applying for a permit, particularly when the worst case disaster scenario occurs, 11 people die and there is no actual means available by design, due to this very lack of oversight, to bring a swift and reasonable end to the disaster. That oil spewing into the Gulf is a daily reminder to the survivors of the deceased, a cruel and unusual punishment to inflict upon them, particularly when the United States Government is sitting on the financial resources the Gulf Needs based on legalities of “responsible party” when that same government is legally a stake holder in the Oil Industry.

I ask you, isn’t it the United States government, who has received over 2 billion dollars in oil revenues in the last 60 days from our nations oil production across America, also putting royalty profits before the safety of the people of the Gulf, safety to their livelihood, safety to their wildlife, environment, and way of life? And isn’t this only an exacerbation of the failure of oversight by the United States government, a negligence that could only contribute to this disaster? Sure seems to me the United States Government put the Life, Liberty and Pursuit of Happiness of the people in the Gulf Coast in jeopardy in exchange for Oil Royalty Revenues.

At least now you know you can’t trust this Oil Industry Partner, The United States Government, to do the right thing, apparently the “small people” perspective, that is the PR whip to beat up on BP and “big oil,” is so contagious that government is infested with it, I mean, you don’t see any legislation being proposed to divert these royalties to the Gulf right? This must be the root to the attitude of corruption that has permeated the entire United States Government.

Thank you for reading,

Toddy Littman

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