Chap on the "Fraud" of "Oil Drilling Royalties"

Wednesday, February 24, 2010

Great article by Chap Petersen. Of course, any article that calls oil drilling revenues "a fraud wrapped in a chimera concealed within a pyramid scheme" has got to be great! :)
Let's review the basic facts:

1. Currently, there are no off-shore drilling operations in the coastal waters of Virginia. Indeed, it's not certain that there are any petroleum deposits which can be tapped cost-efficiently. (there is a surplus of natural gas off our coast -- but it's far more cost-effective to obtain it from existing domestic sources)

2. Current Federal law prohibits drilling within 50 miles of the East Coast. That is the absolute minimum standard to protect our coastal environment and U.S. Navy operations. That means that any future off-shore drilling will take place in waters belonging to the U.S. -- not Virginia.

3. The U.S. Congress has recently rejected the concept that coastal states like Virginia would receive royalties from new drilling off our coastline, if such drilling did occur. Quite simply, there is no incentive for inland states to share revenue which would otherwise go to the Feds.

In summary, this is a train going nowhere.
In sum, there probably isn't any economically recoverable oil off Virginia's coast, and even if there is (which is doubtful), we almost certainly wouldn't get any revenues out of the deal. So what do Bob McDonnell and the Republicans do? That's right, they not only assume oil revenues, but lots of 'em, as part of their non-plan to raise money for transportation and other pressing needs. What a joke, is this some new form of "Laffer" economics? Well, we ain't laffin'! Heh.

The bottom line is that Chap is right, "this is a train going nowhere." Which begs the question, "Why does Bob McDonnell keep repeating, 'I think we can, I think we can, I think we can?'"