If companies want to drill for oil in Alaska, they must pay for what two things?

• A. Environmental permits and royalties
• B. Drilling bonds and maintenance fees
• C. Oil leases and tax on oil
• D. Land purchase and import duties

Answer: (C)

In Alaska, access to drill on public lands and the revenue the state gets from oil are handled through two primary payments. First, a company must obtain an oil lease, which grants the legal right to explore and drill on state lands. Without this lease, drilling isn’t permitted. Second, once oil is produced, the company pays a tax on that oil to the state, providing ongoing government revenue. These two payments—the oil lease to gain drilling rights and the tax on produced oil to fund public needs—are the most fundamental costs tied directly to starting and operating oil extraction. Other items like environmental permits or bonds may be involved, but they are not the two core payments described here.