The most recent problems affect the “royalty-in-kind” program, which collects royalties in the form of oil and gas instead of cash; MMS sells the products for a profit. MMS says it’s more lucrative than a cash royalty program; good-government groups and many experts disagree.
Apparently, so does the Government Accountability Office (pdf):
MMS’s annual reports to the Congress do not fully describe the performance of the royalty-in-kind program and, in some instances, may overstate the benefits of the program.
The report (released today) cites some striking statistics: In 2006, for example, 64 percent of the oil collected through a royalty-in-kind program was sold essentially at a loss â€” below the royalties MMS would have received from a cash royalty program.
Not particularly encouraging, particularly as MMS plans to expand the royalty-in-kind program in the next few years.