DENVER—The Center for Western Priorities today launched a new “Fair Share” campaign designed to highlight the sweetheart deal oil and gas companies receive when operating on public lands. The campaign includes targeted advertising in Washington, D.C. (view the ads here), an informational website, and a new Public Lands Oil and Gas Lease Tracker.
“Taxpayers are getting shortchanged by oil and gas companies operating on America’s public lands,” said Greg Zimmerman, policy director at the Center for Western Priorities. “Nearly every step in the process results in a sweetheart deal for producers, costing taxpayers hundreds of millions every year.”
Fiscal issues related to oil and gas drilling on American public lands are coming into sharper focus with many in Congress pushing for more drilling on public lands and the Interior Department recently indicating that it will review the royalty rates charged for oil and gas produced on public lands.
“Oil and gas development is one of the many uses of our public lands. We are calling for public attention and for simple, commonsense reforms so that taxpayers receive a fair share from the use of public resources,” said Zimmerman.
The Fair Share campaign focuses on three areas where oil and gas companies receive a sweetheart deal and taxpayers are shortchanged:
- Outdated minimum bids permitting oil and gas producers to lease public lands for as little as $2.00 per acre, less than the cost of a fast food hamburger.
- Outdated rental rates allowing companies to hold public lands for as little as $1.50 per acre a year.
- Outdated royalty rates on the oil and gas produced from American public lands, shorting taxpayers $500 million a year.
The campaign’s advertising calls attention to the revenues lost from outdated royalty rates. Unchanged since the 1920s, the 12.5 percent federal royalty rate on oil and gas extraction is significantly lower than the 16.67-18.75 percent charged by Western states for production on state-run land. It also falls well below the 18.75 percent charged by the federal government for offshore production.
A study by the Center for Western Priorities shows that the outdated royalty rate costs U.S. taxpayers $500 million per year on the oil and gas from Western lands. According to President Obama’s annual budget, fair share reforms on public lands could generate an additional $2.5 billion over the next decade for the U.S. Treasury.
The Public Lands Oil and Gas Lease Tracker, which will be available as an ongoing resource, keeps a tally of the number of acres leased to oil companies. It currently provides a summary of all oil and gas leases sold in 2014 and will be updated as more acres are leased.
The Public Lands Oil and Gas Lease Tracker highlights two important issues, the hundreds of thousands of acres leased by oil companies each year and the significant amount of public lands leased for the minimum bid of $2.00 per acre. In 2014, more than 15 percent of public lands leased by oil and gas companies in seven Western states, 94,517 acres in total, were acquired with a $2.00 per acre bid. Of the nearly 35 million acres of public lands currently held by oil and gas companies, nearly 22 million are unused.