Prometheus 6

The Interior Department study, commissioned to analyze the costs of royalty incentives and their effectiveness at increasing energy supplies, was completed in fall 2005. But the study was not released until last month because senior officials said they considered it incomplete.

After repeated requests, the department provided a copy to The New York Times with a “note to readers” that said the report did not show the “actual effects” of incentives. Indeed, Interior officials contended that the cost of the incentives would turn out to be far less than the study concluded....

But industry analysts who compare oil policies around the world said the United States was much more generous to oil companies than most other countries, demanding a smaller share of revenues than others that let private companies drill on public lands and in public waters. In addition, they said, the United States has sweetened some of its incentives in recent years, while dozens of other countries demanded a bigger share of revenue.

Incentives on Oil Barely Help U.S., Study Suggests
By EDMUND L. ANDREWS

WASHINGTON, Dec. 21 — The United States offers some of the most lucrative incentives in the world to companies that drill for oil in publicly owned coastal waters, but a newly released study suggests that the government is getting very little for its money.

The study, which the Interior Department refused to release for more than a year, estimates that current inducements could allow drilling companies in the Gulf of Mexico to escape tens of billions of dollars in royalties that they would otherwise pay the government for oil and gas produced in areas that belong to American taxpayers.

But the study predicts that the inducements would cause only a tiny increase in production even if they were offered without some of the limitations now in place.

It also suggests that the cost of that additional oil could be as much as $80 a barrel, far more than the government would have to pay if it simply bought the oil on its own.

“They are giving up a lot of money and not getting much in return,” said Robert A. Speir, a former analyst at the Energy Department who worked on the report. “If they took that money, they could buy a whole lot more oil with it on the open market.”