GAO Report on Comparative Oil and Gas Royalties

by Sabrina I. Pacifici on June 4, 2007

Oil and Gas Royalties: A Comparison of the Share of Revenue Received from Oil and Gas Production by the Federal Government and Other Resource Owners GAO-07-676R – May 1, 2007.

  • “Based on results of a number of studies, the U.S. federal government receives one of the lowest government takes in the world. Collectively, the results of five studies presented in 2006 by various private sector entities show that the United States receives a lower government take from the production of oil in the Gulf of Mexico than do states–such as Colorado, Wyoming, Texas, Oklahoma, California, and Louisiana–and many foreign governments. Other government-take studies issued in 2006 and prior years similarly show that the United States has consistently ranked low in government take compared to other governments. In deciding where and when to invest oil and gas development dollars, companies consider the government take as well as other factors, including the size and availability of the oil and gas resources in the ground; the costs of finding and developing these resources, including labor costs and the costs of compliance with environmental regulations; and the stability of the fiscal system and the country in general. All else held equal, more investment dollars will flow to regions in which the government take is relatively low, where there are large oil and gas deposits that can be developed at relatively low cost, and where the fiscal system and government are deemed to be relatively more stable.”
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