BLM Considers Raising Royalty Rates

Fed Potential 600 AEA

The Bureau of Land Management (BLM) announced in April that it is considering raising the royalty rate for oil and natural gas drilled on Federal lands—currently at 12.5 percent of drilling operations’ production value. The Center for American Progress (CAP) recommended that BLM increase the royalty rate for oil and gas drilled on public lands by at least 50 percent and allow regulators to raise the rate further when the price of these fuels is high because they believe U.S. taxpayers “aren’t receiving a fair share from the development of their resources.” But CAP has it wrong. If CAP wanted to increase returns to taxpayers, instead of promoting increases in the rates, they would promote streamlining permitting and bringing common sense to regulation on federal lands in order to increase natural gas and oil production and dramatically increase revenues to the U.S. treasury.

Oil and gas companies prefer to drill on private and state lands instead of federal lands due to permitting delays and massive amounts of red tape on federal lands. On non-federal lands, massive production increases have made the United States the largest producer of oil and natural gas in the world.

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