By Sonam Vashi

President Donald Trump intends to fix crumbling roads and bridges, in part, with a plan that hearkens back to Sarah Palin’s slogan: “Drill, baby, drill.”

“We must take advantage of the estimated $50 trillion in untapped shale, oil, and natural gas reserves, especially those on federal lands that the American people own,” according to a statement on the White House website. “We will use the revenues from energy production to rebuild our roads, schools, bridges and public infrastructure.”

But the math from this plan doesn’t add up. The federal government made only $4.3 billion from oil and gas leases in fiscal year 2016, a fraction of what a massive infrastructure package might cost…

…Given the glut of oil and gas, companies haven’t always been lining up for new federal leases. A land lease sale in Wyoming last month generated $129 million from 53 successful bidders, the second-largest onshore lease sale in the past four years. But other lease sales have not been as successful. Last August, three companies bid on just 24 of the 4,399 tracts of land offered up in the Gulf of Mexico. Six months earlier, another sale there failed to garner a single bid.

“The idea that you’re going to open up a bunch more areas and that’s going to somehow generate more revenue — if anything, it would just depress prices further over the short- and medium-term,” said Sam Ori, executive director at the Energy Policy Institute at the University of Chicago. “You’re almost running in place.”

The federal government makes money when a lease is sold, and it charges rent while companies are preparing to drill, but the biggest payoff comes from royalties when the oil starts flowing. Since oil prices slumped, royalty payments have “basically collapsed,” Ori said…

Continue reading at CNN…

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Areas of Focus: Energy Markets
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Fossil Fuels
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Climate Change
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Fossil Fuels
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Fossil Fuels
Under current policies, fossil fuels will play an important role in the energy system for the foreseeable future. EPIC research is exploring the costs and benefits of these fuels as...