Thursday, June 29, 2006

US government plans to violate contracts

This is very serious. The US Treasury Bill is the - or one of the - most respected investment in the world. It earned this pinnacle because our government is stable and trustworthy. But many in Congress has voted to break that trust. Not on treasury bills, but on oil contracts. They don't like the deals that were made under Bill Clinton. You know, the Democrats gave the store away to big business. So they are talking about asking the oil companies that bought the contracts to renegociate them. Not! They don't intend to ask, but to force them. In English that means the US Government would break the contracts. There are some other ideas being floated. To give preference to the companies that voluntarily accept worse terms. There is nothing voluntary about that. It's forcing, but using a euphemism. The Wall Street Journal (paid subscription) reports:
The House has passed and the Senate Appropriations Committee is considering a measure that would punish companies that refuse to renegotiate the leases, granted by the Interior Department in 1998 and 1999, by barring them from bidding on new leases. Meanwhile, the House is to vote today on a measure proposed by Rep. Richard Pombo, a California Republican, that would require companies that won't agree to pay a higher royalty to pay a "conservation of resources fee" that would add $9 a barrel or $1.25 for each thousand cubic feet of natural gas produced.
Now this is better:
A third approach, being pushed by Rep. Darrell Issa, a Republican from California, wouldn't punish the companies but would encourage them to renegotiate the contracts to raise their royalty payments as "the right thing to do." He said he was confident that most companies will do so if Congress doesn't impose penalties. "I want to make sure that this Congress respects contract sanctity," he said.
Rep. Pombo has been on my good list for years. He is stepping off of it. Do I make myself clear? I am opposed to our government violating contracts.

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