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Tuesday, October 31, 2006
Oil Giant Evades Investigation
The New York Times leads today with a fascinating article about the Interior Department dropping a claim that oil-giant Chevron is underpaying royalties.
Interior Department auditors had accused Chevron of understating the value of the natural gas it extracted on federal lands. Chevron may have done this by exaggerating the costs of processing the gas, perhaps by five times the actual amount. Add it all up, and Chevron alone could have underpaid the royalities owed to the federal treasury by hundreds of millions of dollars. But auditors decided to end their investigation after proving that costs were inflated at only a handful of processing plant. So they won't see if costs were accurately accounted for at many other processing plants, at least for now. And the reasons they cited for doing so seem questionable.
The rest of the article has a lot of interesting stuff on the complicated process of collecting royalties from energy companies. It's hard to tell exactly what's going on, but with all the funny business in revenue collections these days, I tend to suspect the worst.
Oversight of these kinds of administrative decisions, of course, is badly needed.
Posted by Matt Lewis
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