BEFORE THE DEPARTMENT OF ENERGY: Sequential Bidding On the Outer Continental Shelf

by Thomas D. Hopkins on November 14, 1979
by Thomas D. Hopkins, John P. Formby, R. Robert Russell and Rob Sedgwick

The Council on Wage and Price Stability has submitted comments to the Department of Energy on a proposal to establish a new procedure (sequential bidding) for oil and gas lease sales on the Outer Continental Shelf. The proposed regulation is described as experimental, but all new leases would be affected for an indefinite period. The intent of the proposal is to promote competition by easing the financial requirements that face firms bidding in the lease market and to increase government revenue from OCS leases. Sequential bidding has the potential for expanding the number of bids in the lease market, and the Council supports a limited experiment using the new procedure. Adverse consequences are possible, however. Sequential bidding may discourage the formation of joint ventures and investment in pre-sale tract evaluation information. If these effects occur, competition would net be promoted, risks and costs may needlessly rise, and government revenue from lease sales could decline. Thus, the new regulation
may have effects exactly opposite of those intended. The uncertain consequences of sequential bidding lead the Council to recommend a more restricted and better designed experiment to test the merits of the various features of the proposed new procedure.

 Download the Complete PDF   Share Share    Print Print    Email Email

Previous post:

Next post: