#1 cleantech news, reviews, & analysis site in the world. Subscribe today. The future is now.

Fossil Fuels oil-leases-raised-50percent

Published on February 17th, 2012 | by Susan Kraemer


Obama Hikes Royalties on Oil Industry by 50%

February 17th, 2012 by  


For the first time since the 1920s, fees for oil drilling on public land are going up, in an Obama administration Interior Department rule that does not require congressional approval.

The election-year timing almost seems designed to wave a red flag in front of the most obdurate opposition party any president has ever had to contend with, with lavish funding from the fossil industry.

Making the bold move even riskier; this is the first election year after the Citizens United decision, which is sure to unleash yet more fossil industry money against any impediment to the richest industry on the planet.

Interior Secretary Salazar told E&E that no administration has raised royalty rates on oil production since the 1920s, and that the 50 percent raise is necessary to generate a fair return for American taxpayers. The proposed rates will go from 12.5 percent to 18.75 percent.

Offshore oil drillers already pay the 18.75 percent rate.

“It is an appropriate fair market value rate,” Salazar told a panel of House appropriators this afternoon. “The underlying principle of that is we are mandated by statute, mandated by fairness, to make sure the American taxpayer is getting a fair return for the oil and gas that the American people own.”

But there is a new wrinkle to this story. The Obama administration mounted an organized push to develop the nation’s renewable energy resources resulting in a quadrupling of solar and wind projects on public land.

In contrast to the sweetheart deals given oil drillers, these renewable energy companies signed land leases that generate a fair return – as I covered in Utility-Scale Solar on BLM Lands to Generate Substantial Income for Taxpayers.

For example, it was estimated in 2010 that the 1,000 MW Solar Millennium project in California will be generating $9.5 million every year between its per-MW fees and land leases.

At the time I was surprised at the high rates expected from a nascent industry, compared with the much better positioned oil industry. Now I think that Obama was setting the stage for this rule change.

This is the first administration that has dared to demand fair recompense on our behalf, as the owners of those public lands, from the richest industry on the planet – since 1920. Other nations demand higher returns for exploiting publicly held assets, according to a Bush era GAO report.

And since a newborn renewable industry has already manned up to paying us – shouldn’t Big Oil?


Tags: , , , , , ,

About the Author

writes at CleanTechnica, CSP-Today and Renewable Energy World.  She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.

  • lucy

    You do realize this will cause the price per gallon to go up! This is not such a great thing….we are the loosers again. Obama wants to price us into Oblivion and the feds clean up and we loose….rolling eyes… sigh….

    • Bob_Wallace

      Do you realize that this will not cause the price per gallon to go up?

      The price of oil is set by the market, not based on what it costs an oil company to get it to the refinery. Let me share a little something with you…

      “The Government Accountability Office (GAO) roiled the waters of the oil and gas world back in 2008 with a report that concluded that the U.S. government was not collecting as much in royalties from oil and gas production on public lands and waters as it should. The implication was that the government was being a patsy to the oil industry….”

      That was when Bush was in the White House.

      The oil companies were already paying 18.75% of revenue for offshore oil. Now they’ll pay us, the people who really own the oil, 18.75% for on shore oil. All that will happen is that they will give up a little bit of their remarkable profits and we will be able to offset a small portion of the cost of keeping two carrier fleets in the Middle East in order to provide security for those very same oil countries.

      Suggest you do less eye rolling and more critical thinking….

      • Eric

        The cost of oil is determined by the current commodity price + local and federal taxes?? There are no other costs associated with the price of oil, really?

        This probably won’t have any effect on pension plans either, that depend on stock returns to keep pace with inflation…looks like more than one person has to do some critical thinking.

        • Bob_Wallace

          What are the other price components Eric?

  • Pingback: Obama Administration Wants To Raise Oil Royalties By 50%()

  • Neclaaz

    I’d simply like to say…..God Bless This President…..I want Obama again….The Man endured hatred from all sides….let’s give him a chance to make the moves necessary…rather than him acting like a Cleaner. Let’s move forward, this President is IN….Amen

    • Bob_Wallace

      Giving Obama a second term is not enough.

      We also have to give him a Congress that works for America as opposed to the current Republicans in Congress who have worked to make President Obama fail by making America fail.

      Have ever seen this before in our country, a political party which has intentionally harmed the country in hopes of political gain?

  • Finally a little good news!

  • Ty

    it’s about time!

  • Energy4all

    This should send a message to the Oil and Gas Industry.

  • Pingback: Obama administration raises oil drilling royalties 50 percent | Grist()

  • lukealization

    Good to see this occurring. Next step is to wipe out the subsidies they have been given for decades.

    It’s still a risky tactic from Obama’s point of view – although, with a completely neutral perspective, I’d be willing to bet Obama wins the election this year, although it will certainly be close.

    I think the majority of Americans will see through Romney’s sheer stupidity. That’s what Obama has going for him.

Back to Top ↑