America’s public lands and natural resources are owned by taxpayers. The federal government manages the development of our publicly owned oil and gas by leasing land to private companies to extract these resources and sell them for profit. Revenues from oil and natural gas leases on onshore federal lands totaled about $7.6 billion in FY2024, accounting for 93% of total revenues from all types of energy and mineral leasing on federal lands. Royalties make up the bulk of that income, making it one of the most important revenue streams within federal energy and resource development programs.

The FY2025 budget reconciliation bill, also known as the One Big Beautiful Bill Act (OBBBA) made several modifications to the federal onshore oil and gas leasing program, including lowering the onshore royalty rate from 16.67% to 12.5%.

Over 100 years ago, Congress established the federal royalty rate for oil and gas extracted from federal lands in the Mineral Leasing Act of 1920, setting a statutory minimum of 12.5% of the resource’s market value—a rate that went unchanged until 2022, when it was raised to 16.67%. Reverting again to the outdated rate hands billions of dollars in potential revenue to the oil and gas industry at the expense of taxpayers and local communities. Had the 16.67% rate been applied over the last decade (2015–2024), taxpayers would have received an additional $1.5 billion per year.

This dashboard demonstrates the scale of recent taxpayer losses under the outdated, below-market rate of 12.5% for all leases issued after the passage of OBBBA.

Methodology

Using Bureau of Land Management (BLM) estimates on the number of wells expected to be drilled on offered parcels in their reasonably foreseeable development scenario analyses accompanying each lease sale, and the average per-well production on federal lands in each state over the last decade (from BLM Oil and Gas Statistics), we calculated projected annual oil and gas production for each lease sale when the leases enter production.

A conservative 10-year useful lifespan of oil and gas wells is used to estimate total future production of each lease sale unless specific state data indicate otherwise. When available, BLM estimates of total oil and gas reserves on offered parcels are used to refine production estimates. Based on the White House budget office’s 2025 price projections for crude oil and natural gas—used to estimate federal royalty revenue from onshore leases—TCS calculates the total value of future oil and gas production from these leases and the associated revenue loss from the outdated 12.5% royalty rate.

For additional information, please contact Taxpayers for Common Sense at info@taxpayer.net