Oil and gas ‘done right’ means higher costs for New Mexico operators, study says

Adrian Hedden, Carlsbad Current-Argus
May 25, 2023

Taxpayers in New Mexico lost an estimated $8 billion in the last decade as the oil and gas industry operated on public land under “outdated” royalty rates companies pay to the federal government as they extract fossil fuels, according to a recent study.

The Interior Department updated the royalty rate from 12.5 percent, which stood for decades, to 16.67 percent under the Inflation Reduction Act (IRA) passed last year.

Taxpayers for Common Sense published the report Wednesday in which it argues that for the last 10 years New Mexicans did not get a fair return for operations on public land under the old fee structure.

This included another $13.1 million in lost revenue from lower rental rates from 2013 to 2022. The IRA hiked those rates to $3 an acre for the first two years of a lease, $5 an acre for the fifth through the eighth year and $15 an acre for years nine and 10. Previously, rental rates were set at $1.50 per acre for the first five years, and $2 an acre for each year after.

Read more at the Carlsbad Current-Argus