Taxpayers lost out on billions thanks to antiquated oil and gas rules

May 25, 2023

Taxpayers have lost out on billion of dollars of revenue from drilling on public lands thanks to antiquated oil and gas rules, according to a new report by Taxpayers for Common Sense. 

For nearly a century, the federal government used the same below-market royalty rate, rental rate, and minimum bid for onshore oil and gas leases. While the Inflation Reduction Act recently raised the federal royalty rate from 12.5 percent to 16.67 percent, it still lags the 18.75 percent that producers are charged for oil and gas development in federal waters. Had a royalty rate consistent with what is charged in federal waters been implemented over the last ten years, the government would have collected $24.1 billion in royalties, and taxpayers would have received $8 billion more in revenue.

Federal and state taxpayers also lost revenue from outdated rental rates in New Mexico, the Western state that produces the most oil and gas. Between 2013 and 2022, the minimum rental rates for leasing federal lands for oil and gas development in the state of New Mexico were set at $1.50 per acre for the first five years of the lease and $2 per acre for the second half of the lease term—rates that had not been updated since 1987. If rental rates had been adjusted for inflation each fiscal year over the last decade, taxpayers would have received $13.1 million in additional revenue from rental fees in New Mexico. The Inflation Reduction Act raised rental rates to $3 per acre for the first two years, $5 per acre for years three to eight, and then no less than $15 per acre for years nine to ten.

The Bureau of Land Management will hold the first oil and gas lease sale since the Inflation Reduction Act passed today. It will include 3,300 acres in New Mexico’s portion of the Permian basin and 6,800 acres in Kansas. Over 200 environmental groups sent a letter opposing the lease sale to the BLM and some are planning to protest the sale outside the BLM New Mexico headquarters in Santa Fe today.

Can renewable energy and conservation coexist?

Grace Wu, an assistant professor in the Environmental Studies Program at UC Santa Barbara, joins Aaron and Kate on the latest episode of CWP’s podcast, The Landscape, to talk about her research on balancing renewable energy development and conservation in the West. The study examined the potential habitat loss and land use impacts of developing the complete set of onshore wind, offshore wind, large-scale solar, distributed solar, transmission, and bioenergy resources needed to reach economy-wide net-zero greenhouse gas emissions by 2050 for the 11 Western states.

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Quote of the day

”No one can accuse us of not attempting a legislative remedy… But given the makeup of the Natural Resources Committee and given the indications, this legislation will never see daylight.”

Representative Raúl Grijalva on his efforts to protect the greater Grand Canyon

Picture this

astrophotography showing stars over grand canyon

Are you visiting the Grand Canyon this Memorial Day Weekend? Make a stop at Mars Hill for some stargazing first!  Plan your visit now at
📸: @joe_llama | Nate Nise

(featured image: Well pads in the Permian Basin in New Mexico, BLM/Flickr)