01:00 AM EDT on Tuesday, April 18, 2006

In the back and forth over wind power, solar power, fuel-economy standards, air pollution, climate change, and other energy-policy questions, it is helpful to remember that oil and gas companies enjoy huge subsidies at taxpayers' expense.

Decade-old incentives meant to encourage drilling in the Gulf of Mexico have lately translated into enormous giveaways. A recent New York Times report estimated the loss to U.S. coffers at $7 billion -- an amount that could quadruple if one company, Kerr-McGee Exploration and Production, prevails in a recently filed lawsuit. The incentives, in the form of waived royalties, were meant to encourage new drilling in deep waters largely owned by the federal government. But they were put in place at a time when energy prices were low. Usually such measures include an escape clause: The companies must begin to pay royalties once prices climb above a given point.

But these escape clauses were erroneously omitted from leases signed in 1998 and '99. By the time anyone noticed, and new fields were starting to deliver, prices were sky-high. Actions pushed by Vice President Dick Cheney's energy task force, and executed through the Interior Department, only sweetened the pot.

Last summer, President Bush signed a bill that included billions in new tax breaks for drillers, along with expanded royalty relief. Heavy contributors to the Republicans, the oil and gas companies appear to have fashioned a nice spot for themselves on the public dole.