The United States government has lost billions of dollars of oil and gas revenue to fossil-fuel companies because of a loophole in a decades-old law. The loophole dates from an effort in 1995 to encourage drilling in the Gulf of Mexico by offering oil companies a temporary break from paying royalties on the oil produced. However, the rule was poorly written, the very politicians who originally championed it have acknowledged, and the temporary reprieve was accidentally made permanent on some wells. As a result, some of the biggest oil companies in the world, including Chevron, Shell, BP, Exxon Mobil and others, have avoided paying at least $18 billion in royalties on oil and gas drilled since 1996, according to a new report from the Government Accountability Office. The companies, which hold government leases to drill in the Gulf, continue to extract oil and gas from those wells while not being required to pay royalties, a right the industry has gone to court to defend. Roughly 22 percent of oil production from federal leases in the Gulf of Mexico was royalty-free in 2018 because of the loophole, the Interior Department said. The report of the windfall to oil companies comes as the Trump administration has moved to further reduce the cost of offshore drilling for the industry, proposing to significantly weaken safety rules put in place after the deadly 2010 Deepwater Horizon explosion in the Gulf of Mexico.
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