States and communities stand to gain millions according to complimentary CWP analysis
DENVER — The Center for Western Priorities released the following statement from Trevor Kincaid in response to a new GAO report, “Actions Needed for Interior to Better Ensure a Fair Return.” A CWP report that was published just months ago called attention to the discrepancy between state and federal royalty rates and offered a state-by-state analysis of how states would benefit by modernizing royalty rates.
“Antiquated federal royalty rates are squeezing state and municipal budgets, leaving hundreds of millions on the table that could be used to improve schools, make neighborhoods safer, repair infrastructure, and even aid conservation projects. The Obama Administration has recognized that revenue from federal land leases are lagging behind state controlled leases, but we need a policy change to bring royalties up to date.”
Below are excerpts from the report CWP released in June 2013:
The federal onshore royalty rate has not been updated since the 1920s, remaining at 12.5 percent. Meanwhile oil and gas producing states in the Western United States charge significantly higher royalty rates than the federal government—typically a rate of either 16.67 percent or 18.75 percent—to produce oil and gas on state-owned lands. Texas collects 25 percent, or twice the federal royalty rate.
Royalties are split roughly 50:50 between the U.S. Treasury and the originating state. While oil and gas companies generate billions in profits each quarter, continued royalty stagnation deprives energy rich states in the Rocky Mountain West of millions of dollars each year. In 2012 alone, between $400 and $600 million in additional revenue would have been generated and distributed to states in the Rocky Mountain West, if royalty rates were increased to 16.67 percent or 18.75 percent.
You can read the full CWP report, A Fair Share, here.