Question

Since 1995, Congress has exempted oil companies that have leases issued by the federal government allowing them to drill for deep-water oil off the Gulf of Mexico from royalty payments as an incentive to spur development in times of low oil and gas prices. These leases were supposed to have included a provision that reinstates the royalties should the market prices of oil and gas exceed a certain level. Because of an error by the federal government, however, the language that reinstates the royalties is missing from the more than 1,100 leases issued by the U.S. government in 1998 and 1999. Since the market price of oil and gas has recently risen far above the threshold levels, this error could allow the oil companies to reap a windfall of more than $10 billion through the life of the leases. In response, the government is pressuring the oil companies to renegotiate the leases. The executives of the oil companies strongly oppose renegotiation; all have issued statements stating that they expect the government to honour the terms of the contracts and that renegotiating a duly signed agreement would set a bad precedent.

Which of the following statements best reflects the position of the oil company executives?

• A. Opportunity seldom knocks twice.
• B. Do unto others as you would have done unto you.
• C. One man’s loss is another man’s gain.
• D. You don’t change the rules in the middle of the game.
• E. Revenge is so sweet.

Answer 1

The correct option is D You don’t change the rules in the middle of the game.

Since the lease contract was signed beforehand, changing the agreement midway once the initial investment has been made is detrimental. Hence option (D) is the answer.