Alexander: Oil and gas royalty policies favor industry, not taxpayers

Op-EdAlexander: Oil and gas royalty policies favor industry, not taxpayers

Energy & Natural Resources  | Quick Takes
Oct 16, 2017  | By  | 4 min read

Last week, I was offered the opportunity to present public comments to the Department of the Interior regarding the newly re-established Royalty Policy Committee. What I witnessed at that meeting was troubling. Everyone in Wyoming should be concerned that on a committee of 38 people, tasked with ensuring that taxpayers are getting their fair return from oil and gas drilling on our public lands, there is not one person from a public interest group, representing the federal taxpayer. In fact, most of the Royalty Policy Committee consists of officials from energy industries that are at the table to protect their own special interest. The truth is that for too long, taxpayers in Wyoming have lost billions of dollars in revenue because of an outdated system that benefits industry instead of everyday Americans.

For decades, the oil and gas industry has been picking up land for pennies on the dollar, thanks to outdated Bureau of Land Management rental and royalty rates that allow oil and gas companies to rent federal lands at $1.50 per acre and pay outdated royalties that are far lower than what many western states, including Wyoming, charge. These rates date back to 1920, in some cases, and have not been adjusted for inflation. American taxpayers are losing out on millions of dollars in revenue each year because of these outdated policies that favor the oil and gas industry’s bottom line over the best interest of the American people.

On top of receiving cut-rate prices on oil and gas leases, the oil and gas industry has been stockpiling leases without taking the next step and developing on these lands. A new report released by Taxpayers for Common Sense on Oct. 3 titled, “Locked Out: The Cost of Speculation in Federal Oil and Gas Leases,” outlines how oil and gas companies are sitting on millions of acres of idle public lands, therefore preventing taxpayers in Wyoming from receiving revenues from other activities on these lands. In Wyoming alone there are over 1.3 million acres of federal lands that were leased for less than $10 an acre, or are otherwise considered speculative, and are not being developed.

Appropriations Aren't an Afterthought

In their first meeting, the members of the Royalty Policy Committee were told that they were to consider themselves the “executives” of energy production on public lands leading the way toward achieving American energy dominance, instead of fiduciaries for American taxpayers, as the Royalty Policy Committee’s charter indicates. Despite all of this, the Royalty Policy Committee has an opportunity to change course, put American taxpayers first, and advance our royalty system into the 21st century. Taxpayers in Wyoming and local communities have been denied a fair return on the resources they own for far too long.

We hope that the DOI’s Royalty Policy Committee will recognize how the current system is in dire need of reform and takes steps to ensure that Wyoming receives the money it deserves when the oil and gas industry drills and produces on our public lands.

Originally published on November 9, 2017 in Casper Star-Tribune