Wasted Gas Giveaway

Wasted Gas Giveaway

Energy & Natural Resources  | Quick Takes
Dec 2, 2016  | 4 min read

Part of President-elect Trump’s pitch was that he could run government more efficiently, with less waste by bringing his business acumen to bear. One thing that successful businesses do is manage their resources efficiently and effectively and get the most value from their assets. They certainly don’t get bilked by their clients, or fail to charge for products.

Well, one of the federal government’s “businesses” is managing public lands and collecting royalties for the use of taxpayer-owned natural resources. The Department of the Interior manages the majority of this development, overseeing production on federal lands and waters that produce approximately 30 percent of our nation’s domestically produced energy. Yet, many of the policies that govern this development are decades-old, and the details of leasing procedures or royalty calculations are usually overlooked. Thankfully, the Interior Department has finally taken steps to update many of the broken policies that oversee energy development—an important win for taxpayers.

In particular, the Department recently issued a directive that would curtail the waste of natural gas during drilling. Production of natural gas has surged in recent years thanks to new technologies. As different basins have become hotbeds for new drilling, Bureau of Land Management field offices have been swamped with applications to drill. Places like North and South Dakota have become like the Wild West. Drillers have been venting (releasing) and flaring (burning off) huge quantities of natural gas as they scramble to set up shop. Gas is cheap and the old federal rules didn’t set any limits on this activity, nor did they require companies to pay a royalty on this taxpayer-owned gas that’s being wasted. Enough gas to power 6 million homes for a year was lost during the last decade. Adding insult to injury, companies can use taxpayer-owned gas to power their operations without paying Uncle Sam a dime. Being conservative, more than $575 million in royalty payments has been lost over the last decade. By limiting royalty-free venting and flaring, the new rule closed a loophole that was only going to become more costly.

Of course the industry is whining. They’re not able to freeload like they were before. So they trot out all sorts of bogus claims like this new rule will increase energy costs for consumers. They know full well that oil and gas prices are set on the global market, in Saudi Arabia as much as in North Dakota. Capturing and selling – instead of wasting – natural gas could also mean increased revenue for both industry (as more gas gets to market) and taxpayers (in royalties).

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Another canard is that the new rule is just about environmental policy. Not to us it’s not. It’s about getting the money taxpayers are due! The industry wants to paint it green because it gets them out of paying the greenbacks they rightfully owe taxpayers. Waste is waste and it is past time to end this wasted gas giveaway —no matter who is in control of Congress or the White House.

As we enter into this next Administration and a new Congress, it is important to remember who the government works for—the U.S. taxpayers. And the methane waste rule makes good business sense for taxpayers. It is fiscally responsible policy that should not be sacrificed to political gamesmanship and industry handouts. The Trump administration and the new Congress should not go back to the days of ripping off taxpayers and allowing rampant waste.