How much do U.S. oil companies pay in royalties to government?
Oil and natural gas production royalties on federal lands are one of the largest sources of income to the federal government, delivering $86 million in rents, royalties and bonus fees every single day.
The bulk of this comes from offshore production, with natural gas production generating 60 percent of the royalty revenue. For federal onshore lands, gas production generates more than 70 percent of royalties collected by the federal government. The Office of Natural Resources Revenue (ONRR) also collects bonus bids and rental payments from lessees.
In fiscal year 2010, the Interior Department distributed $9.2 billion to the federal government, states and American Indian tribes from onshore and offshore energy production―with nearly $6.5 billion of that amount coming from oil and natural gas production. Part of this revenue included $979 million in bonus bids paid by companies to lease tracts for offshore energy exploration on the Outer Continental Shelf in the Gulf of Mexico and Alaska.
That same year, a total of 35 states received $2.2 billion from bonus bids, royalties and rents. According to an ICF International study commissioned by API, developing America’s vast domestic oil and natural gas resources kept off limits by Congress for decades could generate more than $1.7 trillion in government revenue over the life of the resources.
Royalties from Shale:
Between 2000 and 2006, natural gas production from U.S. shale formations grew an average of 17 percent per year, and an average of 48 percent per year from 2006 to 2010. This development of natural gas from shale is responsible for contributing $18.6 billion in federal, state and local government tax and federal royalty revenues, which could more than triple to $57 billion by 2035—generating more than $933 billion in federal, state, and local tax and royalty revenues over the next 25 years on a cumulative basis.
These royalty payments are only possible through access to America’s oil and natural gas resources. Lawmakers have a choice:
- Punitive taxes and restricted development resulting in fewer jobs, less energy and less government revenue; or
- Increased access, resulting in more jobs, more energy to secure the country's future and more government revenue for public education, law enforcement, and a safe and stable infrastructure.
The oil and natural gas industry already supports 9.2 million workers and 7.7 percent of our GDP. Singling out this industry for tax increases will erode that foundation and ultimately result in fewer jobs, less GDP growth and less revenue to the government.
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