Markey objects to a 1995 law that waived royalties to give oil and gas companies an incentive to undertake expensive deepwater exploration. Since high oil prices provide their own incentive for expensive drilling, the law stated that royalties would resume if prices went higher than $28 a barrel—a pittance compared to 2008’s high of $147 a barrel or today’s price of around $85 a barrel—but only applied it to existing leases. While lawmakers claimed they intended for the $28 ceiling to apply to new leases as well, that specification was not included in the law and the Supreme Court ruled in October that oil companies did not have to pay royalties on new leases signed from 1996 to 2000, reported Reuters. The federal government now has to pay back roughly $2 billion in royalties that have already been paid by oil companies, and, according to the Government Accountability Office, could lose up to $53 billion in royalties over the next 25 years.
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