US Interior Department recommends raising royalty rates for federal oil and gas leasing

The Interior Department recommended in a report issued last week that the US raise rental fees, bonding requirements and the royalty rates payable by oil and gas producers through the federal oil and gas leasing program. The report says that current royalty rates shortchange taxpayers, and notes that rates have not been increased for about 100 years.

“States with leading oil and gas production apply royalty rates on state lands that are significantly higher than those assessed on federal lands,” says the Department. It added that bonding requirements have not changed for 50 years, and that minimum bids and rents have not increased for more than 30 years.

The report also proposes imposing more limits on where development can occur, including avoiding leasing where drilling would harm wildlife.

President Biden pledged as a candidate to end drilling on federal lands and waters as part of his administration’s strategy to address climate change. However, industry advocates say that cutting back access to federal lands and waters would both make oil more expensive and increase US reliance on foreign oil during the country’s transition away from fossil fuels.

Kim Biggar

Kim Biggar started writing in the supply chain sector in 2000, when she joined the Canadian Association of Supply Chain & Logistics Management. In 2004/2005, she was project manager for the Government of Canada-funded Canadian Logistics Skills Committee, which led to her 13-year role as communications manager of the Canadian Supply Chain Sector Council. A longtime freelance writer, Kim has contributed to publications including The Forwarder, 3PL Americas, The Shipper Advocate and Supply Chain Canada.
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