After a century of scandal, neglect and mismanagement, the Department of the Interior’s oil and gas leasing activity is a disaster. The new administration’s reform of the federal oil and gas program will serve Montana and the nation well.
Here are the problems needing solutions:
- Interior has shortchanged the American people, states and communities billions upon billions of dollars in petroleum revenues—essentially giving away free to speculators and petroleum companies more than a third of federal oil and gas produced every minute of every day.
- Reckless oil and gas leasing has crowded out and undermined other beneficial uses of federal land for conservation, recreation, cultural, wildlife and agricultural purposes—violating multiple use laws and harming the outdoor recreation and tech economies in Montana.
- Federal leasing allows petroleum companies to pollute the land, air and water and accelerate climate change—without paying for damages inflicted on the rest of us.
Because current leasing is a mess, it needs to take a rest until sound practices are put in place. With oil prices low, now is the right time for the feds to stop selling oil and gas leases on the cheap to companies only too happy to capture speculative gains and windfall profits at the public’s expense. A leasing pause protects the public from getting fleeced again.
The oil and gas industry has stockpiled a glut of federal, state and private leases that will maintain jobs and production while policy changes are made. With half the total federal acreage leased for oil and gas not producing anything, more leases are not needed.
Montana’s economy is hurt more than most states by out-of-control federal leasing. Nearly 1.1 million federal acres in Montana—the most among lower 48 states—are locked up in suspended leases producing nothing, not even rent. In 2019, another 1.2 million acres of technically “active” leases—64% of such leases—were idle and not producing any oil or gas.
Federal agencies typically fail to actively manage non-producing leases for outdoor recreation and conservation—creating a drag on key parts of Montana’s economy. Montana’s outdoor recreation businesses are a growth industry. Our state’s emerging tech industry is also expanding, in part, based on access by its workforce to outdoor recreation. Excessive federal oil and gas leasing harms these promising sectors of our state’s economy.
Revamping the oil and gas program can yield huge benefits for Montanans and the American people. Montana’s congressional delegation should support this effort to realize greater value from federal lands for our citizens.
Updated federal policies would produce a full and fair fiscal return to the public, Montana and its communities. The oil and gas industry touts the approximately $29 million received annually by Montana. In truth, if the federal government secured full market value for oil and gas leases, rents and royalties, Montanans would receive $45 to $50 million annually instead—real money for schools, health care, roads and more.
Better oil and gas leasing practices will create greater room on federal lands for hunting, fishing, recreation, wildlife protection, agriculture, and cultural and historical pursuits. More space for sustainable activities translates into a stronger and more durable Montana economy over the long-term. Whenever petroleum production undermines these activities, it should pay for the value lost to the public.
Oil and gas reform can produce cleaner air, water, and land and reduce greenhouse gas emissions. The economic and human benefits to public health—especially for our children—can easily yield a return several times the cost of better stewardship of oil and gas resources. That’s even before considering the value of decreasing the disruption of life on this planet due to climate change. Whatever damage caused by oil and gas production that is not eliminated should also be paid for as compensation to the public.
The promise for Montana and the nation of the reform process set in motion by President Biden is great—a proper return to the public on the oil and gas resources they own, a more sustainable economy, and more resilient communities with a higher quality of life. This effort deserves our strong support, along with the support of Sens. Jon Tester, Steve Daines, and Rep. Matt Rosendale.
Dan Bucks is the former Director of the Montana Director of Revenue and former Executive Director of the Multistate Tax Commission. He has written major reports and testified to Congress on the need for reforms in the Department of Interior’s fossil fuel leasing programs.