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Taxpayers Lose Big if Congress Lifts Oil Export Ban and Ignores Antiquated Royalty Rates

Oil companies are ramping up an aggressive advocacy campaign to convince Congress to lift the four-decade-old law banning the export of American crude oil. But in its haste to hand the oil industry a major policy victory, Congress risks missing an opportunity to reform the antiquated laws governing oil and gas drilling and development. At the top of that list is the century-old royalty rate that oil companies are required to pay to American taxpayers for the right to extract oil and gas from U.S. public lands.

In this analysis, we calculate how much money taxpayers stand to lose if Congress allows oil companies to send American-produced oil overseas without also ensuring that those companies pay a fair return to taxpayers for oil produced from U.S. public lands.

Using data from the Office of Natural Resources Revenue and a report commissioned by the American Petroleum Institute, we estimate that American taxpayers could lose more than $500 million over the next decade if Congress lifts the crude oil export ban and ignores outdated royalty rates.

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While lifting the export ban may allow drillers to increase oil production, American taxpayers will be left with the costs of increased development, including more lands lost to drill rigs and well pads, spills, truck and train traffic, and local air pollution.

Our lawmakers have an obligation to ensure that all Americans—not just oil companies and their bottom lines—benefit from increased oil drilling. If Congress is going to consider reforming oil policies, it would be negligent to lift the export ban without simultaneously ensuring taxpayers are receiving a fair return from the oil produced here at home.

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Senators may use budget vote to advance efforts to open up Arctic National Wildlife Refuge to oil drilling.
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