The federal government’s ill-conceived royalty relief program for offshore oil and gas drilling could cost taxpayers up to $80 billion—with precious little to show for it. There is scant evidence that royalty relief materially affects the domestic supply of oil and natural gas or our dependence on foreign energy sources. Moreover, money spent on tax incentives for oil and gas companies to encourage deepwater drilling is very likely to have a greater impact on energy security if used to encourage conservation or the development of renewable energy alternatives. As an economic policy, royalty relief appears to have no net effect on jobs at the national level or any effect on energy prices paid by consumers.
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