Editorial: Learning a new drill

Friday, Dec. 29, 2006 | 7:23 a.m.

W hen Congress convenes as a body controlled by Democrats in January, the oil industry is expected to be sporting one of the bull's-eyes in the 2007 session's first 100 hours.

According to a recent story by the Associated Press, Democrats are expected to propose legislation that seeks to reduce the tax breaks that Republicans gave the oil industry less than two years ago and instead use the money to establish a fund for promoting renewable energy sources.

Democrats haven't crafted the details of how a fund to encourage replacing gasoline use with biofuels would work, but aides to House Speaker-elect Nancy Pelosi told AP that at least some of that tax revenue will be used to pay for research into making ethanol from substances other than corn.

Lawmakers also are expected to take a stab at recovering billions of dollars in federal royalties that oil companies have avoided paying because of an error written into the leases during 1998 and 1999.

In a move that has bipartisan support, Congress is expected to investigate ways in which the Interior Department can force about 50 oil and gas companies back to the bargaining table to renegotiate those leases. Five companies already have offered to pay royalties on future production, AP reports, but none is willing to pay on past production. Democrats could propose legislation that would make future oil- and gas-drilling leases contingent upon renegotiating the old agreements.

While the devil is always in the details, the Democratic leadership's overall message to the oil industry is that its federally supported gravy train has come to a halt. It is a good place for Congress to start.

A sizable chunk of the oil industry's massive profits has come from taxpayer dollars and government errors, rather than from the corporate ingenuity that one normally associates with our free enterprise system. Oil companies should help explore renewable energy sources, and companies that drill on federal land should pay for the privilege.