As the Democrats took control of the House and Senate in Congress, they promised a flurry of legislation in the first 100 hours of office. One of the efforts was to go after big oil.

Energy costs that last few years have certain come front and center for most of us. Gas prices are way up, a fact that puts a crimp in the disposable income of a lot of people. To make matters more aggravating, the big oil companies have been reporting record profits. This one-two punch certain created a political climate where such companies were ripe for attack and the new Democrat majority is following through on promises to cut some of the government breaks given to big oil by the Republican majority of the last Congress.

The first issue on the plate is the 6.5 billion dollars in tax breaks given oil companies. The money comes from a tax deduction given to big oil for oil production and refinement from 2004 through 2014. The ironic thing? The oil companies never asked for the tax breaks. In fact, the Chairman of ExxonMobil even testified before Congress in this regard. For some reason, the breaks were passed anyway. Welcome to the concept of government waste. The Democrats are certainly no strangers to blowing money in odd and unique ways, but they seem determined to reduce this mistake by their predecessors.

The second issue has to do with the oil drilling in the Gulf of Mexico. When an oil company wishes to drill on land owned by the federal government, it is supposed to pay royalties on the oil produced. The underwater terrain in the Gulf of Mexico qualifies as such. Alas, somebody in the government failed to include the proper royalty language in the leases signed by various oil companies for the Gulf.

The way the leases are written, the oil companies must pay royalties on the price of crude oil at the time the agreements were entered. There is no language about the royalty being reconfigured as the price of oil goes up. This is standard language for any government lease of this sort. The total lost tax revenue? About 10 BILLION dollars. Oops!

To remedy the lease problem, Congress is threatening to change the underlying law governing them. In truth, most oil companies are already coming on board with the idea of changing the agreements. Five have done so already and the remaining 45 are expected to do so soon. The new tax revenues will be put into an account used to fund research into renewable energy sources. While this is a noble goal, one can predict a good chunk of the money will be wasted because we are talking about the government after all.