The oil-and-gas industry is attacking Interior Secretary Ken Salazar’s comment that his department plans to raise royalty rates for oil and gas produced on federal lands by 50 percent.
The American Petroleum Institute, the main industry lobbying group, called such a proposal another affront to President Obama’s recent claim of support for more oil-and-gas production as part of an “all-of-the-above” energy strategy.
“Increasing royalty rates when the industry already contributes $86 million to the federal government every day will only create disincentives for the domestic production President Obama claims to support,” Erik Milito, API director of upstream and industry operations, said in an emailed statement.
The Obama administration has long indicated it was considering changing the royalty rate. As reported by the energy and environmental news service E&E, Salazar told a House panel this week that the Bureau of Land Management planned to increase the rate from the current 12.5 percent to 18.75 percent, the rate offshore drillers pay.
Administration officials have justified reconsidering the onshore rate in light of a Government Accountability Office finding that the current rate is far lower than what other governments receive.
“”Our intent is to make sure the American taxpayer is getting appropriate value for oil-and-gas development on our public lands,” Deputy Interior Secretary David Hayes told a recent Platts Energy Podium event. He has said it’s difficult to find the right balance between setting the rate high enough to get more value for the taxpayer and not discouraging development of federal lands.
