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Books > Law > Laws of other jurisdictions & general law > Financial, taxation, commercial, industrial law > Energy & natural resources law
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Royalties at Risk in the Development of the Nation's Natural Resources (Hardcover)
Loot Price: R2,900
Discovery Miles 29 000
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Royalties at Risk in the Development of the Nation's Natural Resources (Hardcover)
Expected to ship within 12 - 19 working days
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In addition to having a low government take, the deep water Gulf of
Mexico and other U.S. regions are attractive targets for investment
because they have large remaining oil and gas reserves and the U.S.
is generally a good place to do business compared to many other
countries with comparable oil and gas resources. Multiple studies
completed as early as 1994 and as recently as June 2007 indicate
that the U.S. government take in the Gulf of Mexico is lower than
that of most other fiscal systems. For example, data GAO evaluated
from a June 2007 industry consulting firm report indicated that the
government take in the deep water U.S. Gulf of Mexico ranked 93rd
lowest of 104 oil and gas fiscal systems evaluated. Generally,
other measures indicate that the United States is an attractive
target for oil and gas investment. The lack of price flexibility in
royalty rates -- automatic adjustment of these rates to changes in
oil and gas prices or other market conditions -- and the inability
to change fiscal terms on existing leases have put pressure on
Interior and the Congress to change royalty rates in the past on an
ad hoc basis with consequences that could amount to billions of
dollars of foregone revenue. For example, royalty relief granted on
leases issued in the deep water areas of the Gulf of Mexico between
1996 and 2000 -- a period when oil and gas prices and industry
profits were much lower than they are today -- could cost the
federal government between $21 billion and $53 billion, depending
on the outcome of ongoing litigation challenging the authority of
Interior to place price thresholds that would remove the royalty
relief offered on certain leases. Further, royalty rate increases
in 2007 are expected to generate modest increases in federal
revenues from future leases offered in the Gulf of Mexico. However,
in choosing to increase royalty rates, Interior did not evaluate
the entire oil and gas fiscal system to determine whether or not
these increases strike the proper balance between the
attractiveness of federal leases for investment and appropriate
returns to the federal government for oil and gas resources.
Interior does not routinely evaluate the federal oil and gas fiscal
system, monitor what other governments or resource owners are
receiving for their energy resources, or evaluate and compare the
attractiveness of federal lands and waters for oil and gas
investment with that of other oil and gas regions. As a result,
Interior cannot assess whether or not there is a proper balance
between the attractiveness of federal leases for investment and
appropriate returns to the federal government for oil and gas
resources. Specifically, Interior does not have procedures in place
for evaluating the ranking of (1) the federal oil and gas fiscal
system or (2) industry rates of return on federal leases against
other resource owners. Interior also does not have the authority to
alter tax components of the oil and gas fiscal system. All these
factors are essential to inform decisions about whether or how to
alter the federal oil and gas fiscal system in response to changing
market conditions.
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