20 November 2013, News Wires – At a time when money is tight and spending cuts are front and center in Congress, the oil and gas industry is proving to be a boon to public sector coffers.
A combination of fees and royalty payments worth more than $14.2 billion – the second-highest amount ever – has been paid to the federal government by oil and gas companies that drilled on public lands or U.S. waters during the fiscal year ending on Oct. 1, according to the Congressional Joint Committee on Taxation.
The bounty, which was collected by the Interior Department, was $2 billion above year-earlier levels. Some of the increase can in part be chalked up to a combination of hydraulic fracturing and horizontal drilling that has led the current boom in onshore drilling and the Gulf of Mexico. The rise in fees is also associated with a government decision dating back six years ago to increase offshore royalty rates to help fund conservation programs and local governments.
Finally, the rise in revenues paid by the oil and gas sector reflects how bonus bids from oil and gas auctions in the Gulf of Mexico were recorded by the government in 2012 and 2013. Sharing royalties with states with oil, gas and mineral deposits is seen as a winning situation by the Interior Department.
“Domestic energy production infuses funding into communities across the United States that creates American jobs, fosters land and water conservation efforts, improves critical infrastructure and supports education. The funding reflects significant energy production from public resources in the United States and serves as a critical revenue stream for federal and state governments and tribal communities,” said Sally Jewel, Interior Secretary, before the Senate Energy and Natural Resources Committee.