The People of America's Oil and Natural Gas Indusry

More Oil and Natural Gas Production, More Revenue for Governments

Mark Green

Mark Green
Posted November 19, 2013

The Interior Department says it disbursed more than $14.2 billion in revenue generated by energy production during the federal fiscal year that ended Oct. 30 – a $2 billion or 17 percent increase over the previous year. The increase included $2.77 billion in bonus bids for new oil and natural gas leases in the Gulf of Mexico. Interior Secretary Sally Jewell:

“Domestic energy production infuses funding into communities across the United States that creates American jobs, fosters land and water conservation efforts, improves critical infrastructure, and supports education. The funding reflects significant energy production from public resources in the United States and serves as a critical revenue stream for federal and state governments and tribal communities.”

Interior said revenues were distributed to state, local, federal and tribal accounts for reclamation, conservation, recreation and historic preservation projects. Local governments use these revenues for needs ranging from funding schools to infrastructure improvements, the department said. More than $8 billion was sent to the U.S. Treasury to fund programs for the entire nation.

Certainly, this is good news. Increased production of U.S. oil and natural gas results in job creation and economic stimulus, as well as more revenue for governments in the form of income taxes, rents, royalties and bonus payments. Every day the oil and natural gas industry delivers about $85 million to the U.S. Treasury. Our effective tax rate of 44 percent (2007-2012) leads other industries.

Even better news: With pro-energy development policies in place, the oil and natural gas industry could do more – more jobs, more stimulus, more revenue for government. According to a Wood Mackenzie study, such policies could generate more than $800 billion in additional, cumulative revenue for government by 2030.

Increased access to domestic reserves is key. The vast majority of the growth in U.S. oil and natural gas output – which last month saw U.S. oil production top imports for the first time since 1995 – has come on state and private lands, not from areas controlled by the federal government, where sales from production have been declining. Politico reported recently:

“Credit for the rise in American energy production goes to the men and women working every day to develop oil and natural gas here at home. … Domestic oil and natural gas production is only on the rise thanks to development on state and private lands,” Kyle Isakower, vice president of regulatory and economic policy at the American Petroleum Institute, said in a statement. EIA spokesman Jonathan Cogan said the uptick in U.S. production “has been primarily driven by development of crude oil resources in shale and other tight rock formations, especially in North Dakota and Texas.”

While Interior’s announcement is welcome, it hints at what could be with increased access, a common-sense approach to regulation and policies that encourage development. Additional thoughts, here, from AEI’s Mark J. Perry. Industry is ready to add to the benefits it already is providing to our country.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.