DENVER March 9, 2020 – As oil prices plummet amidst the COVID-19 outbreak and a production war between OPEC and Russia, oil producers on public lands in the American West are facing bleak prospects in the coming weeks.
The crash will likely lead to bankruptcies among small oil producers, resulting in additional abandoned wells on public lands. Previous analysis by ECONorthwest found that cleanup for wells on federal lands could cost up to $6.1 billion, far exceeding the $162 million in reclamation bonds provided by operators. Taxpayers are left on the hook for cleanup costs, highlighting the risks of depending on a boom and bust extraction economy.
The Center for Western Priorities released the following statement from Policy Director Jesse Prentice-Dunn:
“The collapse of the oil market is a bleak reminder that the Trump administration’s drill-everywhere agenda will have lasting implications for communities around the West. When small producers go out of business in another boom-bust cycle, far too often taxpayers are stuck with the cleanup costs.
“After addressing the COVID crisis, Congress should turn its attention to the outdated Mineral Leasing Act that allowed these boom-bust incentives, and overhaul the hundred-year-old law to ensure America’s public lands contribute to a robust and sustainable renewable energy economy in the coming years.”
- U.S. taxpayers could be on the hook for billions of dollars in oil and gas well cleanup costs [Center for Western Priorities]
- Oil price war threatens widespread collateral damage [The Washington Post]
- Western oil and gas spills tracker [Center for Western Priorities]
- Outdated oil and gas royalty rates are costing taxpayers billions each year [Westwise]