Work commitment bidding is available for mineral leasing on the Outer Continental Shelf, and has been considered for leasing the National Petroleum Reserve in Alaska. This leasing system isan imprecise method of subsidizing domestic energy development. While certain non-market benefits arguably exist to warrant a subsidy on domestic production or a tariff on imports, work commitment bidding does not appear preferable to methods which raise the price received by domestic producers. Significant administrative problems also complicate any proposed use of work commitment bidding. Use of a fixed minimum work commitment offers a theoretically possible way of counteracting risk-averse behavior in high-cost exploration areas. But for such a system to work, the government must be able to adequately predict the exploration behavior of a risk-neutral firm on the tract. Areas of further study are suggested.

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