Budget cuts would stop payments to Gulf states for coastal restoration efforts

Fuel Fix:
President Donald Trump wants the federal government to stop sharing oil and gas royalties from the Gulf of Mexico with Texas and other states along the Gulf Coast.

In his budget proposal for 2018, the White House proposes eliminating a decade old program that was set to deliver up to $275 million to Texas, Louisiana, Alabama and Mississippi next year.

The funds are set aside under the law to protecting the Gulf coastline, with money directed to maintaining levees and other infrastructure, hurricane relief and preventing further erosion of wetlands that are fast disappearing along the Gulf Coast.

Elected officials along the Gulf Coast, along with an oil and gas trade association, quickly raised opposition.

“This budget robs Louisiana of financial resources promised to us for coastal restoration,” said Louisiana Governor John Bel Edwards.

“Eliminating Gulf state revenue sharing for offshore energy production would punish coastal states that support and host the development of home-grown energy and jobs,” said National Ocean Industries Association President Randall Luthi.

The White House estimated the move would save $3.6 billion over the next decade. But some officials expressed uncertainty whether eliminating royalty sharing would save the government as much as the White House claimed.

Texas was slated to receive up to $80 million of next year’s allocation, but an official from the Texas General Land Office, which administers the funds, said the agency is only budgeting to receive $12 million because of low oil prices.
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There is more.

While offshore wells are still an important part of US energy security, the shale revolution has besides reducing dependency on imported oil, has also reduced to some extent the reliance on offshore production.   Offshore producers have responded to lower oil prices by also becoming more efficient.  The budgeting for the potential revenues in Texas suggests that the savings from this cut may be overestimated.

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