Sweet Crude Deals

Like oil, issues surrounding the Deepwater Horizon leak are flowing out into the media. Some details have been lying near the surface.

Taxpayers are receiving significantly less of a bang for their buck from offshore oil development—even though energy companies have access to six times as many leases as they did in the early 1980s.

Two research professors from the University of California and University of Louisiana published the results of their Federal oil leasing study last June. It can be found online in Miller-McCune magazine. A blog post here by Elizabeth McGowan revisits the issue in light of the British Petroleum oil leak.

Statistics compiled by two researchers studying the last 30 years of leasing policy show that per-acre lease rates have plummeted almost nine-fold from shortly after the time Ronald Reagan assumed the presidency to the tail end of President George W. Bush’s second term.
An average of $2,224 per acre for all federal leases sold between 1954 and 1982 careened to $263 per acre for federal leases sold between 1983 and 2008.

In March President Obama announced his plans to extend oil leasing he spoke of his overall energy policy strengthening the economy, but no plans were apparent to revamp the current leasing program that was originally altered in the Reagan era and again under Clinton to favor the oil industry.

The leasing study points out how the country could benefit from a change.

Big picture arithmetic shows that such leasing by MMS (Minerals Management Service) is second only to the Internal Revenue Service in dollars destined for Uncle Sam.
“The 300 million-plus Americans are the ones who own this offshore oil source,” he [Professor Bill Freudenberg] continues. “It’s precious and there isn’t that much left. We could use the money to pay for schools, parklands and other necessities, instead of just saying nobody should make money off of this except for top executives of oil companies.”