For years, environmental advocates have argued taxpayers have gotten a raw deal. Petroleum producers, they say, pay too little for the privilege of drilling on federally controlled lands — under rates originally set in the 1920s.
Now Biden’s Interior Department may reconsider the royalty rate and other fees levied on oil and gas companies as the new administration halts auctions off drilling rights on federal lands.
“The program is outdated and doesn’t work for anyone except oil companies and their executives,” said Jenny Rowland-Shea, a policy analyst at the Center for American Progress, a left-leaning think tank with the Biden administration’s ear.
But oil companies are pushing back on the notion of higher fees at a time when so much of the industry is still reeling from the pandemic-fueled downturn.
The royalty rate for oil and gas drilling hasn’t been updated since the Woodrow Wilson administration.
It was set at at a minimum of 12.5 percent when he signed the Mineral Leasing Act in 1920 — but hasn’t budged up since, even as drilling for oil became more lucrative and less risky over time.