Feds to Raise Oil Production Royalties

[jpak]

http://www.lasvegassun.com/sunbin/stories/bw-exec/2005/apr/27/042705637.html

WASHINGTON (AP) - With oil prices rising, the Interior Department wants more royalties on energy production.

The department's Bureau of Land Management gave notice Wednesday that it plans to suspend its policy of offering discounted royalties for producers of heavy crude oil, starting in November. There are 19 such companies operating on 39 leased properties nationally.

The discounted rates, which have helped prop up the industry since 1996 when prices were lower, would return when oil prices fall below $24 a barrel for six consecutive months. Heavy oil operators pay a customary royalty rate of 12.5 percent per barrel, but under the royalty relief program that rate has ranged from 3.9 percent to 11.6 percent per barrel, said Patrick Etchart, spokesman for Interior's Minerals Management Service in Denver.

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Westly sued the Interior Department last year claiming the government had not proven that oil royalty discounts help increase production. That case is pending. Interior collects nearly $19 million a year in royalties from heavy oil, but that is just part of the $7 billion annually it collects from royalties on all production of oil, coal and natural gas.

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[thegreatwildebeest]

1. This would be a good thing...

I would see this is a good thing, if the royalties went to fund sustainable or renewable energy sources. Somehow I get the feeling they just go into a general revenue fund to help subsidize other fossil fuel projects, or just general government expenses.