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It's not necessarily that it's an uneconomic lease (I don't have any facts). But that initial payment is not the value paid to the government. The lease bid i

It's not necessarily that it's an uneconomic lease (I don't have any facts). But that initial payment is not the value paid to the government. The lease bid is premised on the risk of exploration, and the huge royalty payments to the government that accrue from any production. Tying up the ground with the initial bid without exploration and production locks away all of that value. To be equivalent, the environmental bid would have to offer the NPE of all of the royalty revenues that would have otherwise been produced, discounted for the likelihood of discovery. And there's no way they could afford that. Natural resource production comes at some cost, but it also produces huge benefits to society. Nobody wants to see a hole in the ground, but everybody wants schools and roads . . . and, yes, gasoline. Lease bid fees are not relevant to the conversation.

woeirua 5y ago
Most areas, especially in the contiguous United States, have already been explored to some extent. These ultra cheap leases reflect the fact that the likelihood of economically producing hydrocarbons in this area is extremely unlikely.
- sdenton4 5y ago
  Or, the ultra-cheap leases represent giveaways of public goods to corporate interests. Political consideration of these deals is more about personal+crony enrichment than it is about generating public tax revenue.
  - woeirua 5y ago
    You are obviously totally ignorant about how the leasing process works. Leases are auctioned off to the highest bidder.
CameronNemo 5y ago
What do you mean by production? I assume you mean extraction, not production. These companies cannot synthesize fossil fuels at scale. In which case, the no-extract bid has the added benefit of not taking the resource out of the public's hands. The royalty is a pittance compared to the true value of the publicly owned resource.
mcguire 5y ago
Royalty payments aren't really huge. Tax revenues are, but note that the environmental leaves the petroleum in the ground, where it can be recovered later. Those huge benefits come with huge externalized expenses, too.

woeirua 5y ago

Most areas, especially in the contiguous United States, have already been explored to some extent. These ultra cheap leases reflect the fact that the likelihood of economically producing hydrocarbons in this area is extremely unlikely.

sdenton4 5y ago
Or, the ultra-cheap leases represent giveaways of public goods to corporate interests. Political consideration of these deals is more about personal+crony enrichment than it is about generating public tax revenue.
- woeirua 5y ago
  You are obviously totally ignorant about how the leasing process works. Leases are auctioned off to the highest bidder.

CameronNemo 5y ago

What do you mean by production? I assume you mean extraction, not production. These companies cannot synthesize fossil fuels at scale. In which case, the no-extract bid has the added benefit of not taking the resource out of the public's hands. The royalty is a pittance compared to the true value of the publicly owned resource.

mcguire 5y ago

Royalty payments aren't really huge. Tax revenues are, but note that the environmental leaves the petroleum in the ground, where it can be recovered later. Those huge benefits come with huge externalized expenses, too.