About $6.1 billion in revenue from oil and gas operations on federal lands has been lost by New Mexico over the past decade under a royalty rate unchanged since 1920, according to a recent study.
Taxpayers for Common Sense found through its research that if the 12.5% rate paid by fossil fuel companies to operate on federal public lands between 2012 and 2021 was increased to the 18.75% recently enacted by the administration of President Joe Biden, about $3 billion in additional revenue would accrue “directly” to new Mexican taxpayers.
Nationally, the report estimates that $13.1 billion was lost under the lower rate that was changed in an April announcement by the US Department of the Interior.
Sign up for our newsletter, the Daily Briefing, to get stories like this straight to your inbox every morning.
The DOI’s decision came after the agency blocked new federal oil and gas leases when Biden took office in January 2021 and began a review of his fossil fuel programs.
This has been decried by oil and gas industry groups and oil-producing states as an action that could cause economic damage and increase US dependence on foreign energy sources.
An injunction was later filed in federal court for the Western District of Louisiana, compelling the federal government to resume selling leases to oil and gas companies for development.
After:Chevron expects continued Permian Basin growth amid global energy volatility
It came after a November 2021 report was released by the DOI calling for a higher royalty rate and a thorough review of the implications of oil and gas on pollution and man-made climate change.
The busiest oilfield in the United States, the Permian Basin in southeastern New Mexico, was due to see its first federal lease sale to industry from the Biden administration scheduled for June 16.
Those leases were to be sold at the higher royalty rate, and Taxpayers for Commons Sense vice president Autumn Hannah said Congress and the executive branch should take steps to ensure it becomes permanent.
After:‘Here’s what we’re exposed to’: Carlsbad oil and gas pollution to be monitored via grant
Offshore leases already drive the 18.75% royalty rate, records show, and Hannah said it was necessary to ensure a fair return to taxpayers in New Mexico and the United States.
“For 102 years, oil and gas companies have been able to ‘buy low and sell high’ on leases to drill on US public lands,” she said. “These public lands, owned by all Americans and held in trust by the federal government, contain vast deposits of valuable oil and gas resources on millions of acres throughout the western United States.”
The report showed that in 2021 alone, $2.1 billion in national oil and gas revenue was lost due to low royalty rates in a year of record industry profits as that oil prices have risen amid the country’s recovery from COVID-19.
After:Oil and gas pump $1.1 million into New Mexico politics. What does this money buy?
According to the report, the top 20 oil companies in the United States reported profits of $73.6 billion last year.
“Reforming the federal oil and gas system will benefit all taxpayers, grow our economy, and help us move toward more balanced energy development on public lands that belong to all Americans,” Hannah said.
“In effect, taxpayers subsidized oil and gas companies operating on US public lands and their profits pumped back into shareholders’ wallets.”
After:Low oil production and high air pollution impact comes from New Mexico “stripping” wells
In its April 15 announcement, the DOI said it had completed reformed environmental assessments for New Mexico and other state lease sales, taking into account potential greenhouse gas emissions if the leased land were developed. , as well as broader local and indigenous contributions.
The reforms also led to an 80% reduction in the acreage offered for sale, from 646 parcels in approximately 733,000 acres to 173 parcels in 144,000 acres.
The lands offered in the New Mexico sale, five parcels of about 500 acres in Lea and Chaves counties, were unaffected by the decision, records show.
After:New Mexico’s oil counties have some of the worst air pollution in the state, study finds
In a statement, US Interior Secretary Deb Haaland, herself a New Mexico native and formerly the US state representative for her second congressional district, said the agency would pass the needs of Americans before industry profits in the future.
“For too long, federal oil and gas leasing programs have prioritized the needs of the extractive industries above local communities, the natural environment, the impact on our air and water, the needs tribal nations and additionally other uses of our shared public lands,” Haaland said.
“Today we begin to reset how and what we consider the highest and best use of American resources for the benefit of all present and future generations.”