BILLINGS, Mont. – The Trump administration has awarded energy companies hundreds of breaks on payments for oil and gas extraction from U.S. lands and the Gulf of Mexico during the coronavirus pandemic, according to a government database and federal officials.
The temporary breaks on royalty and rental payments are intended to help companies with workforce problems or other issues after government-imposed shutdowns due to the pandemic caused fuel demand to plummet worldwide.
Critics argue the breaks on government fees are unnecessary industry handouts that in some cases are benefiting companies with histories of environmental violations or past failures to pay royalties.
Prices for oil have rebounded in recent weeks, topping $39 a barrel for West Texas crude on Wednesday after dropping below $13 in late April. Industry representatives say a full recovery is still far off.
The administration has now approved at least 117 applications for royalty reductions on U.S. lands in three Western states, according to Department of Interior data analyzed by The Associated Press.
In the Gulf of Mexico, five companies were deemed eligible for royalty relief and 12 applications from those companies have been granted, according to Karla Marshall with the Interior Department’s Bureau of Safety and Environmental Enforcement. The agency refused to provide details on the sizes of the leases, when the breaks were granted and the names of the companies involved.
AP reported in late May that the Trump administration had begun approving royalty relief requested by energy companies. The value of the breaks will depend on how much oil and gas the companies extract.
Companies typically pay the government 12.5% royalty payments on revenues from oil or gas extracted from public lands. The administration has cut that rate, in some cases to as low as 0.5%, on leases in Utah, Wyoming and Colorado.