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This opinion column was submitted by Christi Cabrera-Georgeson, the policy and advocacy director for the Nevada Conservation League and a Reno native.
While families in Nevada struggle to pay some of the highest gas prices in the nation, oil and gas companies are posting record profits and looking to exploit the federal oil and gas leasing program by pushing for greater access to our public lands for drilling. More drilling won’t do anything to lower gas prices; however, it will help oil executives rake in even more profits as they abuse the federal government’s broken leasing system and put Nevada’s public lands, natural resources, and communities at risk.
The federal onshore oil and gas royalty rate was established more than 100 years ago under the Mineral Leasing Act of 1920 and has not been raised since. This rate, along with other fiscal rates and terms for leasing and drilling on our public lands, has never been adjusted for inflation, advancements in drilling technology, or even to simply match the federal offshore rate. As a result, oil companies are allowed to lease our public lands for pennies on the dollar and unfairly profit at the expense of taxpayers. While oil and gas CEOs are raking in record profits, taxpayers have lost out on at least $13.1 billion in revenue between 2012 and 2021, according to a recent analysis from Taxpayers for Common Sense.
Oil and gas leasing is a bad deal for Nevada, forcing us to auction off vast amounts of our outdoor spaces at a price that does not reflect the true value of our public lands — a fact made more egregious given that our state rarely produces oil and gas to begin with.
That’s why the Department of the Interior’s decisions in the most recent federal oil and gas lease sales to limit leasing only to areas near existing development and to require a long-overdue increase to the royalty rate for any leases sold were such important policy changes that just made sense. The industry said an 18.75% royalty rate would be too high, but the results of the sales — including in Nevada, where oil and gas companies purchased half of the acreage that was offered for lease — prove that the new rate did not deter companies from scooping up public lands. This rate now needs to be made permanent, so that taxpayers don’t continue to lose out on important revenues that could be put to use in our communities.
Updating the royalty rate to require oil and gas companies to pay their fair share for drilling on public lands is one of many changes that are needed to reform the federal oil and gas program. Even after oil and gas CEOs spent months asking to lease more public lands for sweetheart deals, the industry still left lands on the table that were made available for lease. The lands that the industry chose to pass on at the June sales are now available for noncompetitive leasing — a harmful practice that fosters speculation, and allows companies to buy up unsold leases at cut-rate prices for up to two years after auction. Noncompetitive leasing is already a serious issue in our state; these backroom deals rarely generate any benefit for taxpayers, and instead lock up our public lands in leases and prevent adequate management of our outdoors for other important uses like wildlife habitat and conservation.
Congress also has the opportunity to curb speculative leasing and update the fiscal rates and terms for leasing and drilling on public lands to ensure that taxpayers get their fair share. Nevada’s Congressional delegation were some of the first leaders to take action to advance these reforms. Last year, Senators Jacky Rosen and Chuch Grassley introduced the Fair Returns for Public Lands Act to, along with other important updates, increase the royalty rate from 12.5 percent to 18.75 percent, which could raise approximately $400 million in additional revenue over the next decade. U.S. Senator Catherine Cortez Masto (D-NV) introduced the End Speculative Oil and Gas Leasing Act to prohibit oil and gas leasing on lands known to possess low or no potential for development, and Representative Susie Lee (D-NV) sponsored the House companion to Senator Cortez Masto’s bill.
Updating federal onshore fiscal policies will have no effect on gas prices, but will ensure taxpayers receive a fairer share for the use and extraction of publicly-owned resources while cutting down on the speculative leasing practices that impair Nevada’s public lands. I’m thankful that the Biden administration decided at the outset to implement a higher royalty rate for last month’s lease sale. Now, the Department of the Interior and Congress must follow our congressional delegation’s lead and make these and other reforms permanent. This is the path forward to make this system work better for everyone — not just oil and gas CEOs.
Christi Cabrera-Georgeson is a lifelong resident of Reno, Nevada and has been advocating for strong environmental legislation as the policy and advocacy director for the Nevada Conservation League.
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