How the US Maintains High Income in Oil and Gas Royalty Rates The trend of selling and buying oil and gas royalty interests has become extremely popular in the United States. Partly because it benefits both the parties and partly because there is a need for oil and gas and therefore exploration benefits all sections of the society, this deal is one that benefits everyone. The landowner gets a major amount of capital without having to do much and the Oil and Gas Company can benefit from mineral rights and explore oil and gas without having to buy the land and without getting their money stuck in one investment. By buying oil and gas royalty interests, oil companies can invest in several places at the same time. However, the transaction of selling and buying oil and gas royalty interests is not as easy as it sounds on paper. It can actually be quite tricky and there are various people who get cheated. However, before we assume that everyone gets cheated in this process, it is also important to note down the government’s point of view regarding royalties. The United States of America has earned a major $20 billion in taxes and $13 billion by royalty payments along with an additional $10 billion in the upfront fees that comes with the purchase and sale of royalties. And these figures mark the year of 2008 alone, which shows how much the government benefits from such transactions too. Moreover, these figures can be compared with the Industrial leaders of the world when it comes to economies earnings. These figures are much greater than other
nations of the world and this is why the royalty system in the U.S. is so developed and reputed. The United States puts a great proportion of interest on the upfront costs of royalties and this is precisely how the government benefits from such deals. However, it is interesting to note that even the high proportion of interest cannot stop such transactions because they are still beneficial for both the parties; the landowner and the oil or gas company. It has been noted that a company in the U.S. will have to pay up to three times more than any other place in the world, which makes many wonder how the United States is still able to earn profits and collect such a high revenue from oil and gas royalties. While there is no denying the fact that the U.S. government has made it expensive to buy and sell royalties, there are several different benefits and incentives that encourage the sale and purchase of oil and gas royalties. It is due to these incentives that some people assumed that the United States has a very open approach and encourages companies to make oil and gas investments. Even if the masses start believing so, several companies will always be exception to this. One thing that most other countries cannot match with the United States is the fact that the U.S. has huge oil and gas reserves and resources, which inevitably encourages the royalty business. This is great news for both the oil and gas companies and the landowners. https://storify.com/uniroyalties11/https-editor-storifycom-558126de9ec83c50575a987ba