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May 5, 2017

Federal Oil and Gas Leases Could Boost Government Revenue

  Winchester Herald Chronicle

President Trump recently proposed opening up more federal land and offshore for oil and natural gas exploration. That’s good news.

Federal revenue from leasing onshore oil and natural gas resources averaged $3 billion annually between 2005 and 2014. Federal revenue from leasing offshore resources $8 billion annually for the same time period. That’s $11 billion total annually.

But that’s not the whole story. While most of those years hovered around $11 billion, the federal government took in $24 billion in 2008 alone, nearly twice the next highest year (2006).

Why? The Department of Interior implemented a bonus bid system, in addition to royalties and rents, that allowed companies to bid more if they thought a site would be productive. When the Obama administration came to power in 2009, it shuttered the program.

The Institute for Energy Research (IER) suggests, “With an aggressive pro-energy leasing program, the United States could raise another $12 to $15 billion per year.”

Just so.

However, that report was produced four years ago. While it envisioned an expansion of federal leasing, it didn’t imagine the possibilities under a Trump administration.

Indeed, now that the U.S. is expanding both crude oil and liquefied natural gas exports — as Forbes contributor Jude Clemente pointed out — the U.S. is set to rival Russia in energy exports. “U.S. LNG is so desired in Europe that some nations have offered to accept higher prices for it, willing to lose money to lower the reliance on Russia.”

The benefits to the economy — and to the federal budget — cannot be overstated.

Of course, there are those who worry about the environmental impacts of expanded fracking. But those concerns about respiratory problems or natural gas leaks have been proven not to be the result of fracking.

Fracking fluid spills are almost always small, local spills, completely contained and the result of human error.

Concerns have been raised that some wastewater injection wells increased the number of earthquakes. The oil and gas industry is innovating ways to reuse fracking water and identify areas that would be less prone to earthquakes.

The federal government needs new revenue streams to pay for a slew of different programs, and expanded oil and gas exploration could provide that funding. It’s a win for the energy industry and the U.S. economy.


  • TaxBytes-New

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