On March 31, the federal government leased 42,532 acres of public land in Colorado for oil and gas development at the recently reduced federal royalty rate of 12.5%. The result is an estimated $75 million in lost royalty revenue over the life of these leases.
This sale adds to mounting losses. TCS estimates that taxpayers have already lost more than $637 million in projected royalty revenue from leases sold since July 4, 2025, when the One Big Beautiful Bill Act (OBBBA) reduced the onshore royalty rate to 12.5%—below what states and private landowners typically charge.
Colorado was the sixth largest producer of federal oil and third largest producer of federal gas over the last decade. Federal lease sales in the state vary greatly, with some auctions raising over $4,000 per acre and others generating just $10 per acre, the legal minimum bid.
Results from today’s lease sale:
Today’s sale offered 90 parcels of public land in Colorado, totaling 52,703 acres, and leased 68 parcels, totaling 42,532 acres. More than half of the leased acreage was sold at the legal minimum bid of $10 per acre. 80% was sold for less than $20 per acre.
The sale’s average bid—$182 per acre—was inflated by one highly competitive 500-acre parcel of land in Arapahoe County that was leased for $10,000 per acre. Excluding that one parcel, the sale’s average bid was $64 per acre—on par with historical leasing trends in the state, both for leases offered at a 12.5% royalty rate and more recent leases offered at the 16.67% royalty rate.
The lower royalty rate did not make these leases more competitive. It simply reduced future royalty revenue. In Colorado alone, taxpayers lost an estimated $811 million in revenue from FY2013 to FY2022 under the 12.5% rate. With record-high production across the U.S., losses will continue or even grow worse. Because revenue is shared between the federal treasury and states, Colorado taxpayers will also lose funds for schools, infrastructure, and other local priorities.
The Bureau of Land Management estimates that the parcels sold today could yield 4.4 million barrels of oil and 379 billion cubic feet of natural gas over a conservative 10-year lifespan. Based on the White House budget office’s 2026 price projections—used to estimate federal royalty revenue from onshore leases—that production could be worth roughly $1.8 billion. At the 12.5% rate, taxpayers would receive about $226 million in royalty revenue, roughly $75 million less than we would under a 16.67% rate.
Oil and gasoline prices are set on global markets, so the war with Iran and related supply risks have pushed crude prices higher, causing consumers to pay more at the pump and on their utility bills. Updating onshore leasing policies would not change how gasoline prices are set, but it would ensure a better return for taxpayers on the production of publicly owned oil and gas.
Federal oil and gas belongs to the American people, and leasing terms should ensure taxpayers receive a fair return from the development of our valuable resources.
