Oil Industry Scooped Up Offshore Leases at Bargain Rates

Friday, May 21, 2010
Friends of Big Oil: Presidents Reagan and Clinton

When Norway leases its offshore territory to oil companies, the government receives more than 75% of the revenues. The United States, however, takes in less than 20%, making coastal petroleum opportunities a fantastic bargain for the industry.

Two university professors, Bill Freudenburg of the University of California, Santa Barbara and Bob Gramling of the University of Louisiana, Lafayette, went back through decades of oil leases issued by the federal government, mostly through the office of the Minerals Management Service (MMS), and found the average price per acre was $263 from 1983 to 2008. But during the previous three decades (1954-1982), the government had charged an average of $2,224 per acre.
An important shift occurred during the Reagan administration, especially under the leadership of Interior Secretary James Watt, with the MMS dramatically reducing the cost of leasing oil-rich parcels to companies. Subsequent administrations, including President Bill Clinton’s, continued the discounted pricing, allowing the industry to make a killing through offshore leases.
-Noel Brinkerhoff
Pay, Baby, Pay (by Bob Gramling and Bill Freudenburg, Miller-McCune)


Joseph Conrad 10 years ago
Shoddy valuation/analytic methods and WORSE revenue collections make that 20% IN REALITY LESS THAN 12 CNTS ON EVERY DOLLAR the US SHOULD get. But hey, folks! Americans just want their big screen and F250's nd don't bother them with 'DETAILS' about their 1,500 rules and their minions are SCREWING THEM.

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