Trump Administration Wants Federal Government To Stop Making Oil & Gas Royalty Payments To Gulf States

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US President Donald Trump has proposed that the federal government cease paying out oil & gas royalties for Gulf of Mexico oil & gas production to states situated along the Gulf Coast, according to recent reports. (Editor’s note: To clear up any confusion, as one of our readers notes in the comments, “This is NOT a plan to reduce oil & gas royalty paid by drillers. It is a plan for feds to stop sharing that money with the states along the coast.”)

To be perhaps more clear about the matter, President Trump’s 2018 budget proposal would perhaps eliminate (next year) a decade-old program that sees Texas, Alabama, Louisiana, and Mississippi paid large sums of money originating from Gulf of Mexico oil and gas extraction. To use 2018 as an example, some ~$275 million would be paid out to the states in question that year — unless Trump’s budget proposal goes through.

Louisiana Governor John Bel Edwards stated: “This budget robs Louisiana of financial resources promised to us for coastal restoration.”

To explain further, the funds are supposedly meant to be used to protect the Gulf of Mexico coastline — levee maintenance, the prevention of coastal erosion (as much is as possible anyways), and hurricane relief.

National Ocean Industries Association President Randall Luthi commented: “Eliminating Gulf state revenue sharing for offshore energy production would punish coastal states that support and host the development of home-grown energy and jobs.”

Here’s more on the matter: “The White House estimated the move would save $3.6 billion over the next decade. But some officials expressed uncertainty whether eliminating royalty sharing would save the government as much as the White House claimed.

“Texas was slated to receive up to $80 million of next year’s allocation, but an official from the Texas General Land Office, which administers the funds, said the agency is only budgeting to receive $12 million because of low oil prices. Texas Land Commissioner George P Bush held off sharp criticism, saying he was working with the White House on ‘a federal budget that is both lean and effective in protecting our national interests.’

“The royalty sharing with Gulf States was established under the Gulf of Mexico Energy Security Act, passed in 2006 towards increasing oil and gas leasing in the Gulf of Mexico. … Within the administration increasing federal oil and gas royalties is viewed as a necessary tool towards creating a balanced budget over the next decade.”

In relation to this, the Trump Administration is also planning on the opening up of the Arctic National Wildlife Refuge to oil and gas drilling to help “balance the budget.” Expectations are an extra ~$1.8 billion generated over the next 10 or so years. The administration will also be selling off oil from the Strategic Petroleum Reserve, cutting research funding for the Department of Energy (fossil fuel extraction, nuclear energy, renewables, energy efficiency, etc.).

From the perspective of reducing carbon dioxide emissions, it’s hard to tell if those plans together represent a positive or a negative. It should be remembered that the fast-improving economics of some clean technologies doesn’t have much to do with Department of Energy research funding at this stage of the game.

I’ll highlight that it’s interesting that funding for energy efficiency research is being cut by as much as it is — energy efficiency really should be something that nearly everyone can get on board with, shouldn’t it?

Image by Bureau of Safety and Environmental Enforcement

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James Ayre

James Ayre's background is predominantly in geopolitics and history, but he has an obsessive interest in pretty much everything. After an early life spent in the Imperial Free City of Dortmund, James followed the river Ruhr to Cofbuokheim, where he attended the University of Astnide. And where he also briefly considered entering the coal mining business. He currently writes for a living, on a broad variety of subjects, ranging from science, to politics, to military history, to renewable energy.

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