Louisiana Demands More of Offshore Oil Revenues

Louisiana Gov. Kathleen Blanco is threatening to block future offshore oil leases unless her state begins getting a bigger share of taxes from oil and gas drilling in the Gulf. Blanco says the money is needed to help restore coastal areas damaged in part by oil and gas development.

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Louisiana's governor wants more money for hurricane relief and here's how she's campaigning for it. Kathleen Blanco sent a letter to federal officials containing a plea and a threat. She says that unless her state gets more taxes from oil and gas drilling, she may block future drilling off Louisiana's coast. Here's NPR's Greg Allen.

GREG ALLEN reporting:

For years, now, Louisiana and other Gulf States have been asking for a larger share of the tax revenues from offshore drilling. Louisiana currently receives just a small portion, about $40 million last year out of some five billion dollars in total tax revenue. Governor Blanco's letter to the Department of the Interior comes, as a next round of offshore oil leases is due to be signed next month. While the governor isn't objecting to this round of leases, she raises the possibility that she may in the future; pointing to, quote, "The growing tension between uncompensated support for offshore drilling and the state's coastal management program."

Louisiana Senator Mary Landrieu, like Blanco, a Democrat, is trying to build congressional support for a proposal that would give Louisiana the same 50 percent share that Western States get from oil revenue. At a time when there bans on offshore drilling everywhere in the country, Landrieu says in Louisiana, there's growing frustration.

Senator MARY LANDRIEU (Democrat, Louisiana): We're the only coast that has allowed drilling off of our shore, everybody else has shut it down. Yet, when we ask for a fair share of these taxes that are generated, we keep getting told no, no, and no. Meanwhile, our wetlands are eroding. And why are we continuing to just let drilling occur, and have all of the tax dollars go to Washington?

ALLEN: Last year before Katrina, Congress responded to that argument; approving a billion dollars to be split over four years among oil producing Gulf States. Landrieu believes, in the aftermath of Katrina, the time is right to finally give Gulf States, what she considers, their fair share of revenue from offshore drilling. Money that she says would be earmarked for coastal areas.

LANDRIEU: All of the money that we receive through revenue sharing would go to restore the wetlands, which protect all of this infrastructure that services the nation, and protects the ports of New Orleans; but it would also go for levee protection.

ALLEN: The plan, though, faces an uphill battle. The White House, and some influential members of Congress, have opposed giving Louisiana and other Gulf States a greater share of the billions of dollars that each year go directly into federal coffers. The president's coordinator for Gulf States Recovery, Don Powell, says the federal government has already allocated some $100 billion for the Gulf States following Katrina and that should be sufficient to protect coastal areas.

Mr. DON POWELL (Coordinator, Gulf States Recovery): I think there are monies available, to date, to meet the needs of the Gulf States; either through monies that have been allocated, or monies within this $100 billion to meet the needs of the people in the Gulf coast.

ALLEN: In her campaign to get a large share of offshore oil tax revenue, Governor Blanco also has the support of the state's oil and gas industry. Jeff Copesky, with the Louisiana Mid-Continent Oil and Gas Association, says while his group supports the proposal to increase its state's share of tax revenue, the industry is not comfortable with Blanco's threat to block future oil leases. Copesky notes that Shell Oil recently reopened its New Orleans headquarters, where a thousand people are employed. He says blocking future offshore oil leases would put those jobs and many others in jeopardy.

Mr. JEFF COPESKY (President, Louisiana Mid-Continent Oil and Gas Association): All those jobs in New Orleans are supporting the exploration/production that's going on in offshore Gulf of Mexico, off Louisiana's coast. So, I mean, the first people that get hurt in this are the oil and gas industry and the State of Louisiana's economy.

ALLEN: Blanco's position, and her not so veiled threat, comes at a time when Baton Rouge and Washington are at odds on a number of post-Katrina issues. But in this dispute, Louisiana has some leverage; it's the nation's largest producer of crude oil. And as Hurricane Katrina showed, anything that effects oil production there is quick to get the attention of the entire nation.

Greg Allen, NPR News.

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