Will Oil and Gas Regulation Impact Mineral Owners Royalties?
March 5, 2019
The push for clean renewable energy sources and environmentally sound exploration and drilling practices is stronger today than it has ever been in this country.
With this interest in protecting the environment growing, the pressure for more government regulations on oil and gas production has increased as well has the potential to affect private owners with mineral rights for sale.
Although more regulations and bans could provide some environmental protection, what many of those in support of stricter regulations may not realize is that all of this will financially affect average mineral rights owners as well production companies, end consumers, and entire state economies.
What Are Oil and Gas Regulations?
As part of its Energy Policy, the federal government retains the right to regulate where oil and gas is produced in the U.S., how much is produced from an area, and other pertinent production concerns.
Many of these federal regulations are developed for environmental reasons, to control drilling in specific areas and destruction of the natural environment, as well as to promote the development and adoption of newer and renewable energy sources.
There are other regulations that apply to certain areas that are governed on a local and state level as well.
Unfortunately, an unwanted yet unavoidable side effect of these regulations and bans is the effect it has on average mineral owners looking to sell their mineral rights.
Government regulations on oil and gas production can limit competition and stall technology innovation while reducing demand and the ability to produce minerals in certain areas.
This can directly affect anyone earning income from their mineral rights in a number of ways.
Are These Regulations Actually Helpful for the Environment?
The biggest issue with government drilling regulations and bans, in addition to the negative effect they have on anyone with mineral rights for sale in these areas, is how it is questionable whether they are actually having any kind of positive effect.
Still, more environmental groups are seeking additional restrictions and bans on top of these that already exist perhaps without considering all of the facts.
Drilling regulations and bans may provide protection to some areas; however, they don’t protect other areas and may even add to the energy production problem in the U.S.
It can dramatically affect employment rates by putting entire companies out of business and change the whole economy in states with the most regulations.
This is partly due to the fact that in some states where regulations restrict the sale of mineral rights and other property, mineral rights owners are entitled to compensation from the government.
These limitations are not actually achieving the energy benefit they are purported for; in many regulated areas, the cost of energy production has gone up considerably which, when combined with less competition, has resulted in higher energy costs to the consumer.
Higher costs across the board mean a greater effect on the environment, not a lesser one.
The Effect of Oil and Gas Regulation
Although production regulations are designed with the goal of protecting the environment, it seems that they are having the opposite effect in many ways.
From the mineral rights owner who has their income restricted to the end consumer paying more for energy, these restrictions do not always fulfill their intended purpose.
Those with mineral rights for sale should keep up with any local regulations that could affect them and vocally work for changes that actually do help rather than restrict their ability to earn from the sale of their mineral rights!
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