Oil royalties and self-auditing
As we've stated before, almost as important to the new oligopoly as outselling the competition and cutting costs is getting favorable treatment from government bodies. This bounty can show itself in direct ways, such as getting government contract or being extended special protections. In more indirect ways, it can take a negative form: getting the government not to do something.
That's what seems to have happened with US oil industry. A recent New York Times story ("Blowing the Whistle on Big Oil," 12/3/2006), tells the tale of Bobby L. Maxwell. As the article puts it, that 22-year veteran of the bureaucracy "won accolades and awards as one of the Interior Department's bets auditors in the oil patch, snaring promotions that eventually had him supervising a staff of 120 people."
That group's job was to make sure that oil companies extracting crude from government-owned lands paid all the royalties due to the US government. The group collected hundreds of millions of uncollected royalties from companies that had shortchanged the government. But in doing so they had stepped on the toes of companies like Arco (now part of BP) and Kerr-McGee (now Anadarko), companies with allies in the administration.
Now his job has been eliminated in Interior Department "reorganization". As one of the biggest whistle blowers on Big Oil, they were gunning for him. And it's not hard to see that they used their influence to push him out.
As the article points out, "Mr. Maxwell says his frustrations with the Interior Department escalated after the Bush administration took office in 2001. The Interior Department's top priorities became increasing domestic oil and gas production, offering more incentives to drillers in the Gulf of Mexico and pushing to open the Arctic National Wildlife Refuge and other wilderness areas to drilling. The department trimmed spending on enforcement and cut back on auditors, and sped up approvals for drilling applications."
This is not case of troublesome employee, the article points out, as Maxwell had gotten constant good reviews. And as one of the relatively few programs really making money for the government in a completely legitimate way, he's enviously need in a time when the national debt is ballooning.
Fortunately, Maxwell can continue to sue the delinquent oil companies as a private citizen and collect a percentage of the proven underpayment if he wins the case, and there is precedent for doing that. But it's telling that government seems to show no interest in recovering its own money.
Cutting the enforcement budget is based on the absurd theory that industries will police themselves, a watchword of extreme pro-business views. By that measure, why do gas stations have metered pumps, rather than just asking motorists to pay for what they report to have taken. Because we know that given the temptation to cheat, most consumer would, at least a little... Not everyone would steal, but the temptation would be great and many would succumb. What would make anyone believe that big businesses, which are amoral by nature, and which have rigged the books in the past, won't steal any more without real auditing muscle?
8:23:30 PM 
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