BLM and Fairness to the Taxpayer

The Bureau of Land Management is moving finalize its two-yr-old effort to increase the minimum price oil and gas developers must pay to lease Federal land for oil and gas development by five times: from $2 per acre to $10 per acre. BLM also wants to increase the minimum bond those developers must pay from $10,000 to $150,000.

Those increases, on their faces, look like chump change, but those minima are for miniscule fields that are far too small even to think about drilling an exploratory well. Also included in the BLM’s move are these cost increases and production limitations:

  • reduce the primary term for new onshore leases from 10 years to five years, even though a significant percentage of leases require more than five years to start producing. For example, recent data shows that 37% of leases in New Mexico started production more than five years after authorization.
  • raise annual rental rates to $3/acre for the first two years, and then $5/acre, increasing costs by at least $123 million per year.
  • eliminate authority to grant royalty relief in difficult times or national emergency.
  • raise the minimum inspection fees each operator will pay annually to anywhere from $800-$11,300 per lease, varying by lease.

And this:

  • impose a new $10,000/mile annual fee for water depths greater than 500 feet; and $1,000/mile for water depths less than 500 feet. There are approximately 26,000 miles of pipelines in the offshore with about 12,600 miles in waters less than 400 feet and 13,700 miles in waters greater than 400 feet. Increased annual costs would total about $149 million.

The BLM claims that these increases aim[] to ensure fairness to the taxpayer.

That’s silly.

What would be fair to us taxpayers, and especially to those of us ordinary Americans on the bottom rungs of our economy who pay little or no taxes, would be to not do those increases—none of us will see a cent of those cost increases. We will, though, pay even more for our energy—home heating and cooling, fuel for our cars and for the shippers’ trucks. No, the money from those increases will go to the Biden administration’s special interests.

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