Federal policy lets big oil off cheap

By Camilla Feibelman

With 3 million acres of public land currently leased to oil and gas companies for exploration and drilling, New Mexico is the largest producer of oil from federal lands in the country.

The policies governing how these lands are managed and leased haven’t been updated for a century, and companies are getting a sweetheart deal to develop under the Trump administration’s “energy dominance” regime.

In New Mexico, alone, we have lost out on up to $5.5 billion in revenue in the last decade because the federal government’s 12.5% royalty rate (a percentage of profit from extraction that must be paid back to the government) is so low and has not been changed for almost 100 years. On state land in New Mexico, this rate can be up to 20%, and even for federal oil and gas drilling offshore, the rate is 18.75%.

Also, because rental rates, which companies pay annually on each acre of public land they lease, have never been adjusted for inflation, companies have avoided paying $19 million in rent on lands in New Mexico over the past three decades  These rates also haven’t been updated since 1987 and range from $1.50/acre to $2/acre.

How can federal land in New Mexico only be worth $2/acre when state land is worth up to $300/acre?  When a company puts in a bid for federal public land, they start at $2 per acre, a number that hasn’t been updated since 1987. For comparison, a recent lease sale on state-owned land in New Mexico had minimum bids that, for many leases, ranged from roughly $200 to $300/acre.

Federal policy is letting oil and gas companies get away with highway robbery on our public lands. They’re propping up a broken system to take advantage of our public lands and using massive loopholes that allow them to make immense profits. We are working not just to change the overarching policy of energy dominance, but we’re also focusing on the specific ways that corporations take advantage of old rates to take resources for pennies on the dollar.

Small but important changes to modernize these laws could have a meaningful impact and make sure companies are paying their fair share for the use of our public assets.

Federal policy lets big oil off cheap
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