Today, the Bureau of Land Management announced that they’ll be taking action to make sure oil companies are doing right by taxpayers when they profit from oil and gas on public land. This much-needed update will ensure that westerners get an honest return from the oil and gas boom happening on our federal lands, returning much-needed revenue to state and local governments.
The current way of doing business when it comes to oil and gas on public lands is incredibly outdated. In fact, bonding rates were last set during the Eisenhower administration — well before the well-documented shale oil boom on federal public lands.
Meanwhile, the royalty rate for federal lands onshore has also lagged behind both offshore and state land rates—12.5% onshore, as compared to 18.75% for federal offshore leases. That’s nearly a third lower—and it can often mean the difference between well-funded schools or a lackluster education in the western states and counties that have significant amounts of federal land.
A balanced approach to energy development on our western public lands means ensuring that taxpayers get their fair return on our American public resources. This is particularly true when production has been growing at record-high levels—federal onshore oil production increased by 10% in 2014 alone—and oil company profits are soaring. In fact, the Western Energy Alliance’s sustaining members reported total profits of $13.9 billion in 2014—so they can afford to make investments in the communities of the taxpayers whose public lands have made it possible.
BLM is right to move forward with modernizing the federal onshore royalty rate, as the west moves towards balanced energy development on our public lands. It’s not only good fiscal policy, it’s critical—for the sake of our western economies, communities, and infrastructure—that this rate be brought into the 21st century.
If you needed another reason why big oil and gas companies can afford to help provide a little more support to the communities they’re impacting, have a look at the recent profits from members of the Western Energy Association*:
|Sustaining WEA Member Company||Fortune 500 Global Rank 2014||2014||Q4 2014 Profits (millions $)||Q3 2014 Profits (millions $)||Q2 2014 Profits (millions $)||Q1 2014 Profits (millions $)|
|Pioneer Natural Resources||605||$929.00||$431.00||$374.0||$1.0||$123.0|
|QEP Resources, Inc.||739||$784.40||$665.90||$171.1||$(92.3)||$39.7|
|Whiting Petroleum Corp.||764||$772.20||$353.70||$158.0||$151.4||$109.1|
*this data was collected entirely from publicly-available documents for each of the companies listed.