Who Really Profits From Oil and Gas

Who Really Profits From Oil and Gas


There are so many arguments that begin and end with oil and gas leases. Perhaps the biggest argument, is the same issue that plagues so many different aspects of government, money...
by Gypsy Lyn  |   Monday, November 04, 2013
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There are so many arguments that begin and end with oil and gas leases.  Perhaps the biggest argument, is the same issue that plagues so many different aspects of government, money.  Those against big oil tend to claim that oil companies are greedy, and motivated only by money.  Granted, money is a huge motivator, the financial gain for big oil is less than you think.  In fact, our government makes more financially off of oil and gas then the actual companies that fund the projects. 

It is true that large oil companies do profit greatly, yet money made is not done with just one well or lease.  Financial gain is acquired over a period of time with multiple locations being drilled and produced on a daily basis throughout the nation.  If you break down the cost of set up, drilling, producing, and transporting, there is not much room left for profit.  Truth is, it takes money to make money.  On average, the profit from each lease is approximately 4%, assuming that no accidents or problems arise, slowing work.  The real money made from U.S. oil and gas wells goes to the government.  The United States government makes 15% on taxes for each well, this does not include what the city and states make. 

An average oil well in the Bakken Shales of North Dakota costs about $10 million dollars to build, and each well is expected to profit over $20 million dollars over time.  Out of those profits will come $4.4 million in taxes,  $1.6 million in wages, and at least $7.6 million in royalties to land owners.  From there, the remaining money will often be invested in the next oil well.  Based on these numbers, it seems as if so many, along with big oil companies, are getting a piece of the financial pie. 

It is so easy to point the finger at big oil companies when you are against what they do, still you don’t see anyone complaining about the taxes being collected.  Or you don’t have anyone protesting land owners, who are also making ends meet thanks to the oil and gas leases on their property.  Not to mention, no one argues about the unemployment rate going down due to oil and gas wells in the area.  For the life of me, I cannot fathom what benefit anyone has at condemning big oil companies because they collect a profit, when so many others also collect a profit on the same oil and gas wells.

I cannot fathom what benefit anyone has at condemning big oil companies because they collect a profit...

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delma smith | Friday, February 14, 2014
Not to mention the thousands of restaurants and hotel employees that have a job directly because of the oil/gas industry. Just ask the common worker in SW Pennsylvania if they had a job before the Marcellus shale got here, local truck drivers ,waitresses, hotels, all fast food employees, and not to mention the specialty shops that sell the clothing, and equipment that the rig workers must have.
 
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