Federal Oil and Gas Leasing: Another Loser for Nevada and Taxpayers

StatementFederal Oil and Gas Leasing: Another Loser for Nevada and TaxpayersThe federal oil and gas leasing system is broken. Nowhere is that more clear than in Nevada.

Energy & Natural Resources,  | Analysis
Dec 17, 2019  | 3 min read | Print Article

The following is a statement from Ms. Ryan Alexander, president of Taxpayers for Common Sense in response to the oil and gas lease sale held today by the Bureau of Land Management:

“Nevada is a case study in what is wrong with the broken federal oil and gas leasing system. Today’s sale, like the others before it, will shortchange federal taxpayers as well as the State of Nevada.

Federal leasing and royalty collection policies have remained unchanged for decades, which costs taxpayers billions of dollars in lost revenue.

My organization has released detailed reports on oil and gas development on federal lands in New Mexico, Utah, Colorado, and Nevada. What we found was startling.

But Nevada is the worst. Only a small fraction of the parcels put up for competitive auction ever sell, and those that do are usually for the legal minimum of $2/acre.

In an October lease sale, 141 parcels were offered and only 11 received bids. 10 of those received the minimum bid.

In November, the Bureau of Land Management sold 2 of 48 parcels offered, both for $2 per acre.

Today’s sale saw 10 of the 156 available parcels sold, with 6 parcels sold for $2 per acre. Just 6 percent of available parcels were leased.

Low bids, low rates of leasing, and low revenues are a frequent occurrence in Nevada. In the last five fiscal years, less than one-tenth of all leases put up for auction received a bid. And of the ones that did, more than 80 percent received a bid of just $2 per acre.

In fact, most of the federal leases sold in Nevada over the last five years did not receive a bid during auction and were purchased noncompetitively the next day for next to nothing.

Many parcels that are leased in Nevada never even enter production. Of all federal oil and gas leases issued in Nevada over the last 20 years one– just one– lease entered production. At the end of FY2018 over 97 percent of the 880,000 acres under lease in the state were idle, not producing any oil or gas and preventing the land from being used for other purposes.

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Federal taxpayers are not the only ones losing out on these valuable revenue streams. The states receive half of all oil and gas income from production on federal land within their borders.

Federal and state taxpayers are leaving billions of dollars on the table due to antiquated oil and gas policies and giving away land at rock bottom prices. It is past time to overhaul this system and provide a fair return for taxpayers.”

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