US government regulators work for the oil companies

Submitted by Matthew on 10 June, 2010 - 2:23

The Mineral Management Service (MMS) is a US government agency that combines two tasks — collecting revenue from oil and gas for the US government; and regulating health and safety.

The MMS is the second-largest source of income to the US government after taxation, bringing in around $13 billion a year. A branch secretary for the RMT's offshore energy section OILC told Solidarity that in the US, “the operators and regulators have far too cosy a relationship. That was going on here ten years ago. But the employers and the regulators — the Health and Safety Executive — are now separated. That was a result of Piper Alpha. The Dept of Energy regulated the industry at the time, but after Piper Alpha it was passed to the Health and Safety Executive”.

What follows is an edited extract from a longer article, Sex, Drugs and Well Control, available at http://www.oilc.org/oilcorg/sex-drugs-and-well-control.html

Scandal has long surrounded the Royalty In Kind (RIK) scheme at MMS which was designed to enhance revenue collection for the US Treasury. RIK enabled the MMS to take some of the government's share not in dollars but in physical oil and gas and sell it on the open market.

According to statistics maintained by the MMS, RIK in 2006 sold over 800 million cubic feet of gas and 150,000 barrels of oil every day. The value to the government of RIK oil and gas sales in fiscal year 2006 was $4bn, or approximately $11 million per day.

With so much cash sloshing about at MMS things soon got out of hand. According to a US government investigation between 2002 and 2006, nearly a third of MMS RIK staff received a wide array of gifts and gratuities from oil and gas companies that were regulated by MMS.

The same investigation found that key MMS personnel involved with sexual liaisons with oil company management had discouraged the MMS in 2003 from demanding better systems to prevent well blowouts.

The report uncovered a culture of drug use and promiscuity. RIK staff has also accepted corporate hospitality from industry sources when too intoxicated to drive home.

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