Drill, baby, drill: Trump’s bargain basement sale of public lands to oil speculators

  • Published on November 30th, 2018

The Trump regime’s focus on U.S. “energy dominance” has included a huge amount of leasing of public lands for oil and gas drilling—that is, land owned in common by American taxpayers. Since 2016, in fact, the amount of public land made available for drilling has increased six-fold.

oil drilling on public lands

By Meteor Blades

With so much land available for lease, the auction price has been driven way down. Bids of less than $2 an acre are not unusual. In Montana, for instance, the average lease bid has fallen 80 percent since Barack Obama was president.

The low prices have spurred speculators to gobble up big swaths of land throughout the West. Eric Lipton and Hiroko Tabuchi at The New York Times cite the example of London-based oil and gas executive Robert B. Price. He used the Department of Interior’s policy of letting companies designate specifically which land they would like to develop and then holding an auction on it. Few other bidders typically show up. This factor worked out pretty swell for Price:

His gamble worked. With no other bidders showing interest, the government allowed him to secure drilling rights on nearly 67,000 acres east of Miles City in a special noncompetitive sale the very next day. His cost: just $1.50 an acre a year in rent, compared with the more than $100-an-acre average paid by bidders, on top of rent, in competitive auctions in Montana in the final four years of the Obama administration. […]

The plots of land the speculators bid on typically sell for such dirt-cheap prices because there is little evidence that much oil or gas is easily accessible. The buyers are hoping that the land will increase in value nonetheless, because of higher energy prices, new technologies that could make exploration and drilling more economical or the emergence of markets for other resources hidden beneath the surface.

This yields more acres locked into the stockpile of non-producing leases.

The lower prices have reduced the risk for anyone who wants to fund such a venture. In Price’s case, though it’s a long shot, he thinks the public land he now leases may contain vast amounts of helium, which sells for far more than natural gas and oil. He’s seeking investors willing to take a chance on paying for the drilling to find it.

Getting huge gobs of public acreage under lease is a good deal for Price and his speculative brethren. But it’s not so great for the environment and the tax-paying public.

At least seven problems can be associated with the increased leasing:

  • The slice of revenue the government gets as a royalty from oil and gas production on public land is 12.5 percent, the level set by the Mineral Leasing Act just shy of a century ago. That’s ridiculously low.
  • Oil and gas companies have a long history of outright cheating on royalty payments.
  • About one-half the currently leased public land, 11 millions acre, stands idle, which makes more difficult any effort to designate for recreational and wildlife purposes.
  • Nearly one-quarter of the nation’s carbon dioxide—23.7 percent, to be exact—is generated by fossil fuels extracted from public lands, according to a recent US Geological Survey report.
  • Gaining access to drill sites can require a significant amount of environmental stress that includes bulldozing roads and potential polluting of bodies of water.
  • And although companies pledge to clean up after themselves, some don’t do a very good job of it. They must pay a $10,000 bond as surety against violating the terms of the lease, including environmental provisions, a pittance set in 1951, which, adjusted for inflation would be $99,000 in today’s money.
  • Lax monitoring of leases and an opaque process tend to stifle citizen action.

For the remainder of Donald Trump’s term of office, reformers’ toughest demands are unlikely to be met since these activists are calling for complete cessation of leasing public lands for drilling. Even a staunchly Democratic Congress with a Democrat in the White House may not be willing to go that far for years, despite the fact the climate crisis mandates an end to all or at least most drilling for fossil fuels as soon as possible, and not just on public lands. As for improving environmental monitoring of leases, neither the Senate nor White House would go for that under current management.

But one reform could have bipartisan resonance—or rather, it might pick up just enough Republicans to get it through the Senate. That reform would levy a higher royalty on oil and gas taken from publicly-owned lands. This is hardly a radical idea, nor is it new. Most recently, President Obama sought to find a way to increase the royalty.

If Republicans in Congress were actually running the government as a business—the way many of them pledged to the voters that they would operate if elected—they would be begging Democrats to join them in raising the royalty tomorrow. There is plenty of precedent for this. Several conservative states set higher royalties, including North Dakota and New Mexico at 18.75 percent, and Texas at 25 percent, or double the federal rate. Many private land owners throughout the country who lease their land to drillers also get 25 percent.

Money isn’t the key issue, however. That’s a good thing since the ultimate goal is to end extraction and burning of fossil fuels everywhere, which means revenue from leasing will dwindle and then vanish. But in the meantime, the public ought to be getting a fair share of the fuels being taken out of the ground. Ninety-eight years at a rate that was pitiful from the outset is way past long enough.

(Crossposted from DailyKos. Image CC by Jeremy Buckingham on Flickr.)

About the Author

Meteor Blades is a writer and contributing editor at DailyKos. He believes there is something profoundly wrong with our system. - the unchecked accumulation of wealth and power into the hands of a very small group of corporate business interests has contributed to the wholesale corruption of our political system. For an understanding about the level of corruption in our country, he encourages you to view these two PBS documentaries: (1). ,The Untouchables; (2) The United States of ALEC.