The New Mexico Boom That Cost Billions

ReportThe New Mexico Boom That Cost BillionsHow Federal Oil and Gas Policies Fail Taxpayers.

Energy & Natural Resources,  | Analysis
Jun 25, 2019  | 2 min read | Print Article

The complete report is best viewed here, in PDF format

Federal taxpayers own significant oil and natural gas reserves on federal lands throughout New Mexico and other Western states. The Bureau of Land Management (BLM) within the Department of the Interior (DOI) manages these reserves and is directed by law to collect fair market value from their development and sale. The agency is failing to ensure taxpayers receive a fair market value for these resources because its land management policies are weak and outdated.

Problems within the federal oil and gas leasing system have led to billions of dollars in lost revenue and simultaneously saddled taxpayers with associated pollution costs and long-term liabilities. This report will focus on the costs imposed by the following BLM policies:

    • Annual rental rates and the minimum bid price for oil and gas leases that have not changed in more than 30 years;
    • Antiquated procedural carve-outs that allow companies to lease federal land without paying any bid;
    • Royalty rates on the sales value of oil and gas extracted from federal lands that lag the rates imposed on production from federal waters and many state lands; and,
    • Natural gas waste that’s ignored on federal lands while BLM refuses to charge producers for it.

Federal oil and gas development in New Mexico illustrates how BLM’s bad policies can cost taxpayers billions of dollars in lost revenue. Production on federal lands in New Mexico generates significant receipts, and lucrative reserves within limited acreage have created a competitive market for federal oil and gas leases. Yet because of BLM’s low onshore royalty rate and permissive approach to natural gas waste, taxpayers have lost more than $5 billion over the last decade. States receive roughly half of federal receipts from resource development within their borders, so New Mexico taxpayers lost out on roughly $2.5 billion in revenue.

Download or read the full report below.