Fiscal systems for oil in North America
In the current climate of US$40/bbl, governments everywhere need to ensure that the fiscal terms on offer are competitive for the investment opportunities they offer. Typically this would involve a comparison of terms across competing jurisdictions, but in North America this is a particularly challenging exercise.
Comparisons of fiscal systems in North America are distorted by the fact that lease acquisition and royalty payments are payable to private landowners in many US states, as well as in parts of Canada. This private ownership of petroleum resource rights is unique to North America, but with payment terms outside of governmental control and difficult to capture or standardise, an assessment of fiscal terms is complicated, but necessary.
Now that the oil price has fallen, the question being posed by fiscal policy-makers across North America is: are our fiscal terms 'fit for purpose' at current low oil price levels?
This insight supports fiscal discussions by reviewing some of the current fiscal terms for oil that are in place across the continent, and highlights some of the considerations that should be made when legislators review their terms.
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