Cheap Land for Drilling is Costing Us More Per Acre

Keith Kohl

Written By Keith Kohl

Posted June 17, 2015

While we love to encourage growth in the U.S. oil and gas industry, there are some effects that drilling companies should be concerned with.

Drilling LandWhat roads will they use to get out to their new drilling site? What landmarks, man-made or naturally occurring, will they be altering to clear the land? What effects will their drills have on the area around them? Or on the people?

Of course, any good company would be paying the government money to attend to these questions. The government leases the land, after all, and should be charging fees and royalties for all this trouble.

How much do you think an acre costs a company annually? $50? That’s extremely steep. $24? It ought to be by now, but still not even close.

Drilling companies can lease an annual acre of land for as low as $2. And yearly royalties only amount to 12.5% of production revenue. In the last fiscal year, these numbers earned a whopping $13 billion, but should have earned much, much more!

These numbers have been mostly unchanged since 1920, and have not accounted for either new environmental concerns, social concerns, or inflation.

The United States is missing out on a huge share of the oil and gas industry’s profits, and it’s time those numbers get an update.

To continue reading…

Click here to read the Washington Post article.

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