The plaintive wail from the White House that they don’t have the expertise to deal with the BP oil gusher, and so they must defer to the oil company, is actually credible to me. Of course, it calls into question why in the world they would have approved the permit in the first place, and I think that’s a total indictment of the regulatory process, as if we needed another:

Federal regulators responsible for oversight of drilling in the Gulf of Mexico allowed industry officials several years ago to fill in their own inspection reports in pencil — and then turned them over to the regulators, who traced over them in pen before submitting the reports to the agency, according to an inspector general’s report to be released this week.

The report, which describes inappropriate behavior by the staff at the Minerals Management Service from 2005 to 2007, also found that inspectors had accepted meals, tickets to sporting events and gifts from at least one oil company while they were overseeing the industry.

There essentially has been no regulation over offshore and deepwater drilling for the last half-decade or more, that’s what I’m getting from this report. President Obama and Interior Secretary Salazar had 16 months to fix that and, so far, they haven’t. Now they’re breaking up the MMS into three discrete parts, and maybe that will help. But the damage has been done.

About the only area where the Obama Administration and Congress deserve a little praise in this whole thing is that they are planning on raising fees to the oil industry to fund cleanup. Whether the royalty collection arm of the former Minerals Management Service will be diligent in actually collecting that fee is another matter.

Responding to the massive BP oil spill, Congress is getting ready to quadruple – to 32 cents a barrel – a tax on oil used to help finance cleanups. The increase would raise nearly $11 billion over the next decade.

The tax is levied on oil produced in the U.S. or imported from foreign countries. The revenue goes to a fund managed by the Coast Guard to help pay to clean up spills in waterways, such as the Gulf of Mexico.

The tax increase is part of a larger bill that has grown into a nearly $200 billion grab bag of unfinished business that lawmakers hope to complete before Memorial Day.

So inside the jobs bill which includes safety-net expansion, infrastructure funding, closing of loopholes for companies that ship jobs overseas and wealthy money managers taxed on income at a lower rate, and more, comes this four-fold increase in the oil spill liability fee.

Well, if this bill fails to pass, you’ll have a lot of villains to look toward, including the oil industry.

David Dayen

David Dayen