How to Fix It: Stop Leasing Public Lands at Fire-Sale Prices

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In an era of waning fossil fuel reserves and escalating oil and gas prices, it has become fashionable to rail against the power of foreign oil, drawing attention away from the scandal involving the nation’s own energy reserves. American oil and gas come increasingly from land belonging to the taxpayers, but instead of administering these resources in the public interest, the federal government leases them out at bargain-basement rates, under programs that are as inefficient as they are corrupt.

The government has let billions in royalty payments slip through its hands. With oil prices topping $140 a barrel this summer, the Interior Department’s leasing program, run by its Minerals Management Service (mms), stood to lose as much as $53 billion over 25 years from deep-water leases in the Gulf of Mexico alone, according to the Government Accountability Office. One of the officials responsible for signing some of the most ill-conceived leases with the oil companies left the department last year and promptly registered as a lobbyist for Shell. (He joined former Interior Secretary Gale Norton, who in late 2006 was hired by the oil company.)

A first step in turning this sorry situation around is for the government to take charge of mapping public-domain energy resources (instead of buying its maps from the very companies that exploit these resources); deciding how they should be used, if at all; and then leasing them on a closely regulated basis, with terms profitable to the public. The mms should be abolished, and the job of managing these resources should be returned to the less politicized US Geological Survey, which must be equipped with an independent auditing unit that analyzes these arrangements.

Lacking any independent assessment, it’s impossible to calculate the true value of America’s publicly owned energy resources. But just the lost royalties on the Gulf of Mexico leases could be worth as much as all federal investments in renewable energy and energy efficiency programs combined, at current levels.

yeas: Environmental, taxpayer, and watchdog groups, notably the Project on Government Oversight, along with American Indian tribes, have been calling attention to the leasing travesty for years.

nays: The oil, gas, and mining industries, naturally, want to protect their sweetheart deals. They have a lot of support in Congress and Interior—although the DOI’s independently minded inspector general, Earl Devaney, has issued some scathing reports on the mms.

chances? A test run on congressional attitudes toward ending open season on the public domain came with a provision to collect royalties due on the Gulf of Mexico oil leases, drafted by Rep. Ed Markey (D-Mass.). It passed in the House but was pulled from the 2007 energy bill after Senate Democrats beholden to the energy companies joined the opposition. Still, after several damning reports and a series of hearings, the issue seems to be gaining some traction.

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