Lower costs keep the prices down.
The government (that's you) owns the oil in the ground on federal land, and, like any mineral owners, gets its cut --- called the royalty.
I own mineral rights, I get my 1/8 from the operator who leases from me.
I operate oil and gas wells, I pay my 1/8 to the mineral owner from whom I lease.
Here, the government cut its royalty to encourage domestic exploration --- and to get some money, when it was previously getting none.
It's not that hard.
The Canadian Government collected $3 Billion in royalties from the Alberta Oil patch last year and no one is complaining.
The oil industry is flooded with cash right now. If this story is true the US government is subsidizing an industry that is recording record profits.
Sorry, I don't get it.
Paying royalty fees to the Government is counter productive if you ask me when that very Government of ours is asking for more oil drilling. It costs a lot of money to bring in a well and with the very low prices for oil not many companies wanted to expend a lot dollars exploring for new sources of oil/gas. If you add to the low oil prices the royalties paid for drilling on federal lands, you have a lack of drilling IMHO.
I think royalties to the federal government should be done away with as long as there is an agreement that the oil/gas well producer will leave the surrounding area like they found it. They are doing a wonderful job here in Oklahoma of cleaning up old oil/gas sites that were eyesores and not safe. The Government already makes huge amounts of money off the gasoline tax across the Country so why should they get royalty money as well so they can continue to spend on their pork projects.
If we want more domestic oil drilling, you have to do something and this is a start IMHO.
Bush and Cheney just giving more money to Haliburton and their oil cronies!~
More deficit-mongering...
Whatever you do, just make sure you don't drill on ANWR or off the CA coast. We wouldn't want to become more independant or anything.
So the oil companies should be free to explore and drill anywhere they want, regardless of ownership? So they can have an "incentive" to explore? Sixty dollars a barrel isn't incentive enough? Why shouldn't the oil companies pay royalties to the owner of the property that they're drilling on, even if the owner is the federal government? And given that the oil companies aren't exactly hurting right now I can't see where waiving the royalties is justified.