“(Democrats) talk about raising the taxes on the oil companies. I think oil companies pay their fair share,” Benishek said, according to the Petoskey News-Review. “I can understand where the oil company wants to deduct the cost of drilling a well. That’s one of the tax breaks for oil companies — the subsidies — they get to deduct the cost of the well the year you drill.”

The Michigan League of Conservation Voters says that Benishek’s views on the reasonableness of oil company tax breaks, and his voting record, are inspired by contributions from oil companies.

The group said that Benishek accepted $11,000 in campaign contributions from oil and gas companies in the first six months of the year.

“Stating that ‘oil companies pay their fair share’ as they get billions in unnecessary tax breaks is, unfortunately, only saying out loud how he actually votes back in Washington,” Michigan League of Conservation Voters Political Director Ryan Werder said in a statement. “He voted six times to protect tax breaks for his donors in the oil industry and then cast another 45 votes against the programs and funding that keep Michigan’s air breathable and our water safe.”

Benishek did not respond to a request for comment on LCV’s concerns.

Congress has rejected moves to end oil company subsidies despite a Congressional Research Service report that indicated that closing some of them would save $21 billion without affecting gas prices.

In a single sentence, Gov. Arnold Schwarzenegger found a way Monday both to congratulate the Giants and to throw a political jab at Proposition 23, which would suspend the state’s landmark greenhouse gas emissions law.

“The San Francisco Giants defeated the Texas Rangers tonight, just like California voters are going to defeat the attempts of dirty Texas oil companies to undo our clean energy laws at the polls tomorrow,” he said in a written statement.

Schwarzenegger has remained pretty firm in his environmental beliefs amid a growing wave of GOP climate skepticism, making him something of an endangered species among Republican politicians these days. Like Gov. Charlie Crist (R/I-Fla.), he’ll soon be out of office, and the number of Republicans who believe in and care about climate change will receive yet another significant blow.

Michael Bromwich, the current bureau head, has been developing the rules over the last several month, and they should also determine when the offshore drilling moratorium, which was put in place after the oil spill, will end.

According to Dow Jones:

Flickr: Lodigs

After a summer of grimacing at the pump — with gas prices reaching an average of $4 a gallon — consumers are finally getting some relief. Just a few months ago, the cost of crude oil was as high as $140 a barrel. Now it is down below $65 a barrel, the lowest point in more than a year.

This is clearly good news for consumers — at least in the short term — and bad news for oil companies — whose stocks are plummeting. It’s really bad news for the Organization for Petroleum Exporting Countries, which Firday hastily cut daily output by 1.5 million barrels a day Friday. The oil cartel is predicting a decline in global oil demand for 2009.

Over this year, oil consumption has dropped significantly. From January to August 2008, petroleum demand declined by 4 percent, according to the American Petroleum Institute. That’s the biggest drop in the U.S. since 1982, say API economists.

Illustration by:Matt Mahurin

Faced with high energy prices, individuals and businesses had changed their everyday lives. But now that energy prices are falling, economists are asking what consumers will do next.

Some expect to see a consumers return to  their old oil habits. Others say Americans have learned and internalized an important lesson about the risks of depending on oil. Most economists and analysts agree, though, that since cheap oil comes within the context of a faltering economy, consumers will act accordingly.

“Everyone’s continually getting surprised,” said David Pumphrey, deputy director of the energy and national security program at the Center for Strategic and International Studies, or CSIS. When it comes to fluctuating oil prices, he said, “We’re in such uncharted territory right now that it’s pretty hard to get a sense of what might happen next.”

With petroleum demand shrinking, Pumphrey said, the U.S. is in an unusual situation. The continuing financial crisis and accelerating global economic crisis are also unprecedented. In this context, Pumphrey expects the price of oil to hover between $75 and $90 a barrel for the rest of this year, and probably into next year as well. Economists at the Energy Dept.’s Energy Information Admin. project the “absolute floor” for oil to be between $60 and $65 a barrel.

In an email, Adam Sieminski, chief energy economist at Deutsche Bank, discussed what realistically constitutes an extreme low in this day and age. For oil prices to return to “long-run historical averages,” said Sieminski, they would have to reach $35 a barrel. “However, we believe that important changes in the market, especially the geographic location of marginal demand and supply, suggest that $60/barrel represents a more realistic characterization of ‘cheap’ oil.” That’s largely because OPEC has cut production.

Those who study oil markets have differing opinions on how consumers will respond. Pumphrey of CSIS expects that consumers may revert to earlier behavior. “I would not be at all surprised,” Pumphrey said, “to see a return somewhat to the habits that we had before.”

This summer, he said, when gas prices rapidly climbed, “people responded very quickly.” Such a reaction could potentially take place in the opposite direction. “One of the big questions is: Have we seen a structural change in the way people behave or is it just a temporary phenomenon?” he said.

It’s probably a little from Column A and a little from Column B, he says. For example, the increase in small-car sales may suggest a structural shift, but Pumphrey says we’re also likely to see more gas-guzzling SUVs on the road if gas prices stay low over some time — which he believes they will. Pumphrey says the prospect of new oil production overseas  will bring some slack to the oil market, preventing major price spikes next year.

But some groups say the price of oil is likely to climb once the economy recovers. “Next spring,” said Sierra Club spokesman Josh Dorner, “gas is going to climb up again to $4 a gallon.”

Skyrocketing gas prices “kickstarted” efforts to reduce oil dependence, Dorner said. Americans have become aware of the extreme price volatility of oil, he continued, and it has significantly affected consumption habits.

“Obviously, as the price is lower, people are going to consume more,” he said, “but people understand that we need to make a change. I think that message got through loud and clear [this year], so I don’t think [lower prices] are going to dampen enthusiasm for moving in a new direction.”

With the current economic crisis, Dorner explained, businesses and individuals have an interest in cutting energy use. “Anytime the economy is hurting, we use less oil and less energy in general,” Dorner said.

People now realize, he added, that “cheap gas” is a thing of the past. “$2 gas is not coming back. $3 gas maybe, but that’s still not cheap,” he said.

Michael Morris, an economist for the Energy Dept.’s Energy Information Admin., agrees that oil prices won’t stay low for long. He also agrees that consumers won’t significantly increase their energy use in this economic crisis. “I think we’re entering into a recession, so oil prices are not going to do much,” he said.

In addition, Morris says the current pump price is still higher than before gas costs soared this year. The price of oil is unlikely to drop much more than it already has, he said. “I don’t think there’s much more room for downward movement in the price unless the worldwide economy really collapsed,” he noted.

Ron Planting, an economist with the American Petroleum Institute, the trade group for the oil and gas industry, says the sharp decline in consumer demand indicates fundamental behavioral changes. “Some of the changes are persistent,” he said. “People who are thinking about more fuel-efficient cars are going to keep doing that…. People changing jobs think more about their commuting patterns…. People have learned a little more about planning trips — like I’ve discovered that the train works very well.”

As for where oil prices will go next, answers vary, Planting says. “No one has a single-point forecast, because we know how volatile prices can be,” he said. “That kind of risk is just part of the business in terms of exploring for oil and natural gas.”

In the middle of economic and energy crises, says the Dept. of Energy’s Morris, the one thing that can be certain is uncertainty.

“We know this is a very uncertain time; it’s very hard to make predictions,” he said, echoing many other economists and energy experts.

ABC spokeswoman Julie Hoover told the Guardian that the ad was too “controversial” to run during network-sponsored programs.

The commercial calls for ending America’s dependence on foreign oil by turning to wind power and solar power.

It also says that “big oil spends hundreds of millions to block clean energy” through lobbying and advertising. Apparently that was the part ABC deemed controversial.

The ad, titled “Repower America,” was supposed to run the night of the first presidential debate.

In a statement released last week, the CEO of Gore’s group, Cathy Zoi, said, “Did you notice the ads after last night’s presidential debate? ABC had Chevron. CBS had Exxon. CNN had the coal lobby. But you know what happened last week? ABC refused to run our Repower America ad — the ad that takes on this same oil and coal lobby.”

During the presidential debates, both candidates have said they support alternative energy to reduce our dependence on foreign oil. Even President George W. Bush has talked about that. Yet, somehow, it’s controversial when an environmental advocacy group says it?

Watch the commercial for yourself:

These findings come even as the House on Tuesday approved a Democratic-sponsored bill to expand offshore oil drilling.

Illustration by:Matt Mahurin

The royalty-in-kind program, run by Interior’s Minerals Management Service, is the federal government’s biggest revenue source after income taxes. Since its creation a decade ago, its lack of transparency and ties to the oil and natural gas industry have set off alarm bells among congressional investigators and auditors at Interior.

Yet it was three reports issued last week by Interior’s inspector general that blew the lid off what is now considered a “culture of ethical failure” at Minerals Management Service — particularly in its royalty-in-kind program.

The inspector general reports spotlighted some employees at Minerals Management Service who broke government rules by accepting gifts and engaging in sexual relationships with employees of the oil and natural gas industry, among other things. One person cited was Gregory Smith, former director of the royalty-in-kind program. He allegedly partied with oil executives, accepted a consulting job that conflicted with his government work and made cocaine deals with his secretary.

The Project on Government Oversight’s report focuses on the inspector general’s troubling assessment that the energy industry has exploited the government’s royalty-in-kind program to drill on federally protected lands with little accountability. Energy companies self-report how much they drill. Companies can abuse the system by underreporting how much oil and gas they drill– and how much royalties the government should receive.

“The royalty-in-kind program exists to benefit the oil and gas industry to the detriment of the public,” concludes the report. A congressional hearing Thursday will further scrutinize the program’s industry ties.

But as Congress moves to expand offshore drilling, it’s unclear if the scandal-plagued federal program that manages drilling leases will be ended or reformed.

Interior created the royalty-in-kind program in 1998, and made it fully operational in 2004. Before it was launched, the Interior Dept. collected royalties from oil and gas companies “in-value” — meaning it received a percentage of their profits. Under “in-kind” royalties, Interior collects a portion, usually about one-sixth, of the oil and natural gas extracted by the companies leasing federal land.

Employees of the royalty-in-kind program are supposed to sell the oil and natural gas on the open market and turn the proceeds over to the U.S. Treasury.

In 2007, the program generated $9 billion — more revenue than that generated by “in-value” cash payments, according to the Bush administration, which has long supported “in-kind” royalties.

In 2001, the American Petroleum Institute, the industry’s trade association, wrote a memo to Vice President Dick Cheney’s notoriously secretive energy task force urging that the program “should be part of a comprehensive national energy strategy.”

But the Project on Government Oversight, with a catalog of glaring oversight problems, argue royalty-in-kind should no longer continue in its current form. For example, there is no third-party oversight of how many barrels of oil and cubic feet of natural gas companies extract from government land.

Instead, the oil and gas companies operate under an “honor system,” reporting their data and telling Interior what it owes in resource royalties. The program’s computer system is unable to track in a timely manner when industry doesn’t provide the agreed-upon royalties.

A report from the Government Accounting Office, the investigative arm of Congress, that examined Interior’s management of royalties, also released this week, effectively accuses companies of cooking the books by keeping “two sets of conflicting production data — one used by the company and one reported to Minerals Management Service.”

Just how much the government loses in revenue because of the royalty-in-kind program’s industry-friendly management is difficult to determine — because auditors don’t know how much oil and gas companies are extracting that is not being counted by Interior. But recent lawsuits against oil and natural gas companies suggest the amount of money involved.

Last Thursday, the 10th Circuit Court in Denver, where Minerals Management Service is based, found that Kerr-McGee, an energy company since acquired by the Houston-based Anadarko Petroleum Corp., withheld about $7.5 million in oil and gas resources from the royalty-in-kind program. The case was brought by Bobby Maxwell, a former Minerals Management Service auditor who quit the agency in disgust over its lack of oversight.

And in 2007, the Conoco Phillips subsidiary Burlington Resources Inc. agreed, in a case brought by the Justice Dept., to give the government $97.5 million in unpaid royalties.

A spokesman for the royalty-in-kind program declined to comment on the allegations made in the Project on Government Oversight report, instead referring to a statement from Interior Sec. Dirk Kempthorne in the wake of last week’s inspector general reports. “We will take swift action to restore the public trust,” Kempthorne said. “The [Minerals Management Service] will begin taking appropriate disciplinary actions.”

The inspector general’s reports of sex, drugs and largess from oil executives at Minerals Management Service were the rare government audits to make front-page news. They also provoked immediate reaction from lawmakers, including House Speaker Nancy Pelosi (D-Calif.). In a statement last week, she said, the “report documents the pervasive culture of exclusivity that has cheated the American taxpayer out of the billions dollars owed them by the oil companies.”

Yet Pelosi and House Democrats have not significantly rewritten proposed legislation that expands drilling to correct the alleged mismanagement at Minerals Management Service. The speaker did, however, call for a “very strong integrity piece” in the drilling legislation to deter future misconduct at the agency.

The House Committee on Oversight and Government Reform, which has investigated the royalty-in-kind program since the Clinton administration, has begged off holding hearings. The committee’s GOP leadership has called for it. But Rep. Henry A. Waxman (D-Calif.), the oversight chairman, said in a letter that while Interior Dept. mismanagement “epitomizes the close relationship between the Bush administration and the oil industry,” the House Natural Resources Committee has jurisdiction.

That committee is holding a hearing Thursday. Committee Chairman Nick Rahall (D-W.V.) has voiced support for expanded offshore drilling. He has also compared Minerals Management Service to a “television miniseries — and one that cannot air during family viewing time.”

With drilling legislation now heading toward the Senate, the agency and its royalty-in-kind program might not have much down time to clean up its act.