Data Sources:

Data on oil and gas sales are from the Office of Natural Resource Revenue (ONRR), which is housed within the Department of the Interior. These data are available here.

Data on state royalty rates are from the Center for Western Priorities. These data are available here.

Methodology:

In performing this analysis, we took the sales value of the oil and gas produced on federal land in each state in each year from 2003 to 2012 and multiplied it by the current statutory royalty rate for oil and gas produced on federal land (12.5 percent). We then compared this amount to that yielded by applying to the sales value three higher royalty rates that some states apply to oil and gas production on state land.

After determining the difference between the revenue generated by applying the existing rate and each alternative rate, we distributed this additional revenue among the federal and state governments using the current statutory distribution ratios.  Under current federal law, royalty revenue is split between the federal government and the state where the oil and gas is produced, at a distribution breakdown of 51 percent to the federal government and 49 percent to the state government (the exception is Alaska, where the distribution breakdown is 90% to the state government and 10% to the federal government).

To avoid double-counting, oil and gas sales values for each year are amounts initially reported, not adjusted figures later calculated by the Office of Natural Resources Revenue. Initial figures are occasionally revised to account for new information (such as when a company is audited and found to have misreported).

Notes:

(1) Calculations and comparisons are based on the nominal federal rate of 12.5 percent. Because of the availability of deductions to oil and gas producers, the effective rate is actually slightly lower.

(2) Our analysis doesn’t take into account the possibility that an increase in federal royalty rates would have caused a change in production; we assume for the purpose of these visualizations that production would have remained the same.