The analysis found that lease sales under the Biden administration had higher average bids than those under the Trump administration, said Tyler Work, a policy analyst at Taxpayers for Common Sense.
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“Sales initiated under the Biden administration had a slightly higher average bid of about $1,800 per acre, and the sales initiated under the current administration had an average per acre bid of about $900,” Work said.
Nearly three-fourths of the acres leased for oil and gas production nationally were also sold at a reduced royalty rate of 12.5% on the value of minerals produced on the land, compared to the 16.67% rate established by the 2022 Inflation Reduction Act (IRA).
According to an analysis by Taxpayers for Common Sense, the leases sold at the new reduced royalty rate are expected to cut federal and state revenue from oil and gas leasing by an estimated $489 million based on projected production.
“We estimate that the 244,000 acres leased for oil and gas development this year at the lower royalty rate of 12.5% could produce $12 billion worth of oil and gas over their lifetime, which will cost taxpayers $489 million in forgone royalties compared to what would have been generated under the previous 16.67% royalty rate,” Work said.
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“We see that bidding patterns and industry interest did not deviate significantly between, you know, before and after the two royalty rate changes,” Work said. “A higher royalty rate doesn’t make high potential parcels less competitive, and lower royalty rate doesn’t make low potential parcels more competitive.”