Pelosi: Oil companies should pay royalties

DENVER — House Speaker Nancy Pelosi indicated Monday that, if oil companies want to drill offshore, they should not bank on California’s coast and they'd better expect to pay more for the taxpayer-owned crude they do get.

“You want to talk about drilling offshore? Let’s talk about profits made by the oil companies without paying royalties,” Pelosi said Monday morning before members of the California delegation to the Democratic National Convention. “They’re taking your oil without paying any royalties.”

{mosads}Pelosi and other Democratic House leaders are to announce their “comprehensive strategy for American energy independence” at a news conference later Monday in Denver.

Earlier this month, Pelosi announced that she could support including offshore drilling in a larger package of changes to the nation’s energy policies. She had resisted drilling as a “hoax” that wouldn’t lower prices. But she relented after she was pushed by Republican lawmakers and her party’s own vulnerable members, who’ve seen public support for drilling soar this summer along with gasoline prices.  

To rousing applause, Pelosi told the roomful of Californians on Monday, “If folks say we need to drill offshore, don’t come around California.”

She’s already made it clear that in exchange for drilling off the coasts, she expected Republicans and the energy industry to accept measures they don’t like, such as a renewable portfolio standard and the Democrats’ signature “use it or lose it” legislation that would force energy companies to either start drilling on their federally leased land or give it back.

But her remarks Monday morning made it clear that she expects some renegotiation of what the federal government gets for its oil. Oil and gas offshore and under much of the nation’s public lands is owned by the government. The government grants private companies “leases” for the resources in exchange for a portion called a royalty.

Democrats have been clamoring for legislation that allowed oil companies drilling in the Gulf of Mexico in 1998 and 1999 to pay a reduced royalty even though the price of oil had risen substantially. The royalty break was an incentive to drill amid low oil prices. Democrats have suggested that companies be required to repay the back royalties if they want federal leases in the future. Republicans have called that a breach of contract with the drillers.

In addition, <em>The Denver Post</em> reported Sunday that federal investigators are preparing to release a report detailing improper relationships between Interior Department officials who oversee offshore drilling and oil executives, including golf outings, ski trips and romantic liaisons.

Also, Pelosi has been pushing to end tax breaks granted to oil companies. The tax breaks had been given to many firms, but oil companies were not included until Congress extended the breaks to them when it was under Republican control.