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Federal Oil Royalty Cuts Expected to Impact State Budget

Critics of the Bureau of Land Management's move to cut royalty payments worry the action incentivizes oil production during what's been called the biggest oil glut in history. (Matryx/Pixabay)
Critics of the Bureau of Land Management's move to cut royalty payments worry the action incentivizes oil production during what's been called the biggest oil glut in history. (Matryx/Pixabay)
May 28, 2020

SHERIDAN, Wyoming -- As Wyoming faces a potential $2.8 billion budget deficit fueled by the COVID-19 crisis, lawmakers are bracing for a significant revenue shortfall after the Trump administration announced cuts for oil and gas royalties on public lands.

Shannon Anderson, staff attorney for the Powder River Basin Resource Council, says Wyoming has tied its wagon to oil and gas development, and a loss of royalty payments could devastate the state's ability to provide health care, education and other vital services.

"And so when you don't have those checks coming in, which is what the federal government just let the industry get away with, that's going to have significant consequences to how we balance our state checkbook," she states.

Anderson says the U.S. Bureau of Land Management, the agency that oversees the royalty program that sends half of revenues collected to states, made the decision without consulting with state governments and without public input. The BLM makes the case that the move provides long-term value to American taxpayers and will ensure a stable energy supply.

Anderson contends that the rule allowing temporary royalty cuts was not intended to help keep the oil and gas industry afloat. She says the industry is struggling due to a glutted marketplace, not because of royalty payments, and argues the federal government should not be taking money from state coffers to give to bankrupt oil and gas firms.

"And so really, as long as these companies are producing, we need to collect a fair return for the American taxpayers from that federal resource," she states. "Again this is oil and gas, and it's owned by you and me as American taxpayers."

Last week, the Trump administration also sent retroactive rent bills totaling $50 million to wind and solar companies operating on public lands.

A recent report found clean energy job losses tripled in April, and the solar industry expects to employ just two-thirds of the workers it originally projected through June. Almost half of all jobs lost in the energy sector during the health crisis have come from the renewable energy industry.

Eric Galatas, Public News Service - WY