On September 24, the federal government leased 15 parcels covering 17,109 acres of public land in Utah for oil and gas development at the recently reduced federal royalty rate of 12.5%. The result is an estimated $230 million in lost royalty revenue over the lifespan of these parcels.   

9/24 Utah Lease Sale Results 

Today's bidding reflects strong industry interest. The $477 average bid per acre is the highest in Utah in over a decade and more than ten times the state's ten-year average. This reflects how industry is willing to pay competitive rates to secure parcels with high development potential. Four parcels in Uintah County in particular—covering 2,200 acres—sold for more than $1,000 per acre. According to the Bureau of Land Management (BLM), the federal agency in charge of administering these sales, only the three parcels in Sanpete County offered today were estimated to have low development potential.  Unsurprisingly, of those three parcels, one received no bids, and the other two—totaling 3,700 acres—sold for the minimum bid of $10 per acre. 

Industry interest is driven by production potential, not leasing terms. While today's auction set a new state record, it is part of a broader trend that predates recent changes to the onshore oil and gas leasing system. Today is the third Utah lease sale in a row to set a record high average bid per acre. The previous record high was $370 per acre in June 2025 under a 16.67% royalty rate. Before that, the high was $118 per acre in December 2023, also under a 16.67% royalty rate.  

Competitive, market-rate royalty rates do not deter industry interest or production decisions. Across the country in 2024—before the royalty rate was lowered—leases sold for record-high bids, five times the pre-reform 10-year average.  

Critics of higher royalty rates often claim they will discourage production, but industry data tells a different story. The Dallas Fed's latest survey of oil executives in Texas, Louisiana, and New Mexico shows companies pulling back not because of royalty obligations but because of steel tariffs, policy uncertainty, and volatile global demand. At the same time, Utah lease sales are setting record-high bids, including under the 16.67% rate, underscoring that when production potential is strong, companies compete aggressively for leases regardless of royalty terms.  

Offering leases with below-market royalty rates only shortchanges taxpayers by reducing future revenue. In Utah alone, taxpayers lost an estimated $720 million in revenue from FY2013 to FY2022 under the outdated 12.5% rate. With record-high production across the U.S., losses will continue or grow worse. Because revenues are shared between the federal treasury and states, Utah taxpayers also lose money that could support schools, infrastructure, and other local priorities. 

BLM estimates that 13 of the parcels sold today could produce 16.3 million barrels of oil and 660 million cubic feet of natural gas over their lifetime, with production projects missing for two parcels. Using the White House Budget Office's 2025 price projections, that production could be worth roughly $5.5 billion. At the 12.5% rate, taxpayers would receive about $230 million less from today's sale than they would under a 16.67% rate. 

America's public lands and natural resources belong to taxpayers. The federal government manages oil and gas development on these lands by leasing them to private companies, which extract and sell the oil and gas for profit. In return, taxpayers receive:  

• Bids at auction: upfront payments at competitive auctions for drilling rights  

• Rent: annual payments until production begins  

• Royalties: a share of the value of extracted oil and gas  

For decades, the federal oil and gas leasing program lagged behind the private market and state land practices. Outdated terms didn't even keep pace with inflation. In 2022, long-overdue reforms modernized the system by raising royalty rates, updating fees, and ending giveaways like noncompetitive leasing. But the FY2025 budget reconciliation bill, signed into law on July 4, rolled back many of those improvements—slashing the royalty rate from 16.67% back to its 1920s level of 12.5% and reintroducing a loophole that lets companies bypass competitive auction. Taxpayers will once again be shortchanged as companies lock in decades of drilling under terms that fail to reflect the true value of America's oil and gas resources.   

Industry demand for federal oil and gas leases in Utah is strong, and the state plays an important role in American energy production. But taxpayers should not be left holding the bag. The oil and gas beneath federal lands belong to the American people, and leasing terms should ensure these resources aren't given away for less than they're worth.