The state of Louisiana is on the verge of converting millions of dollars in royalty payments from oil pumping into millions of gallons of gasoline.
On Friday the state legislature cleared a bill that requires companies drilling on state land to pay royalties "in kind" instead of in cash. The state would get about 32,000 barrels of oil a day under the law, according to Rep. Elias (Bo) Ackal.
If each barrel can be refined into 26 gallons of fuel, the state will realize about 832,000 gallons each day, said Rep. W. J. Tauzin II of Thibodaux, a strong backer of the measure. That amount works out to roughly one-sixth of the state's daily consumption.
The bill now goes to Gov. Edwin W. Edwards, but his signature is not necessary laws passed by the legislature go into effect 60 days after the legislature's annual session ends, unless there is a veto. Today is the last day of the 1979 session.
While the bill was being considered last week, there was talk of consulting the state attorney general's office on the proposal's constitutionality. But Rep. Manuel A. Fernandez of Chalmette, a member of the House Natural Resources Committee, said, "I know of no effort to question the constitutionality of the bill."
Several Louisiana towns already get some natural gas through "in kind" arrangements with companies, he said.
Under the system without outlined in the bill, the state will receive the oil "payments," and sell them to small refineries, which will then be required to sell the finished product to gas stations throughout Louisiana.
Louisiana, largest producer of oil and natural gas in the nation after Texas, is expected to collect about #187 million in royalties this year, said Fernendez. According to the latest figures, oil production is running at 764,384 barrels a day.
Nevertheless, the state has had some of the nation's worst gas lines, especially in and around New Orleans, Louisiana's largest city. If such a law had been on the books this spring, said Tauzin, the state would have had enough gasoline to avoid the crunch.
While the principal motive behind the bill was to keep more petroleum in the state, the measure also contains an element of revenge - revenge against states such as California which have balked at offshore oil drilling.
"We have oil," said Gen. Jesse Knowles of Lake Charles. "The other people have sandy beaches. Let them see how sand runs in their automobiles."