The good news is that one of President Barack Obama’s worst ideas isn’t going to become law; the bad news is that the president is so out of touch with Louisiana’s needs that the cut was proposed at all.
The budget for the 2016 fiscal year starting Oct. 1 would eliminate the sharing of revenue from drilling in federal waters with Louisiana and three other states along the Gulf of Mexico, as outlined in a 2006 law. Over time, the offshore oil revenue sharing would grow to $500 million for the four Gulf states, Louisiana, Mississippi, Alabama and Texas.
The money is only a small repayment for the impact of oil and gas development in the Gulf. Those impacts are clear throughout Louisiana’s coastal parishes and offshore, where fleets of rigs and boats supply a huge proportion of the nation’s energy.
It’s valuable and vital but unlike states with traditional minerals like coal and oil onshore — those states get 50 percent of the mineral revenues — the offshore oil money has been going to the U.S. Treasury.
We are glad to report that the Louisiana delegation, in company with its sister Gulf states’ representatives, certainly will kill that provision in the president’s budget. It would take an act of Congress, literally, and as U.S. Sen. David Vitter, R-La., said, it has “a zero percent chance of becoming law.”
If that’s the good news, there is the not-so-good news that the cap for offshore revenue sharing remains in place at $500 million a year. Raising the cap has an obvious impact on federal revenues. To put the president’s fiscal 2016 proposal in the best possible light, it’s an attempt by the budget office to hold down the U.S. deficit. Raising the offshore cap also would add to the deficit formally, although one can argue that it’s more a cost of doing business; states pay heavily for the impacts of oil and gas development, and that’s an indirect tax of its own.
What this Obama proposal shows is that federal officials consider a revenue sharing proposal as not legitimate compensation for the affected states, but a subsidy for oil and gas exploration.
The reality is that oil and gas is going to be part of the world’s energy future for a long time. We support, as Obama does, investment in research of renewable energy. That’s a long-term investment.
In today’s world, does it make sense to shut down fossil fuel industries before alternatives are in place? Of course not. But the administration is increasingly misled by environmentalists who believe that oil and gas is dirty energy, that the legitimate needs of coastal states are a subsidy to encourage more drilling.
It is this narrow and crabbed notion of energy policy that has too much influence with the president and his followers.
Again, we don’t like U.S. budget deficits either. Nor are we going to be reflexively critical of honest efforts to cut the deficit. The state, by the way, is going to use the money for coastal preservation — a national benefit that would otherwise cost the federal government a lot more.
What we can’t abide is the notion that Louisiana’s service to the nation’s energy needs is some anti-climate plot.
If the Treasury were a private-sector business, it long ago would have seen a lawsuit about the disparate treatment of the energy states. That lawsuit would have been won by the states, not the federal government.
We applaud the delegation’s efforts to protect revenue sharing and expand it in future.
It’s money that Louisiana deserves and it will be put to good use, an investment in the preservation of the nation’s coastline in the Gulf of Mexico.