Federal revenue from energy production on public lands and waters fell by 10% in the latest fiscal year, totaling $16.4 billion, according to the U.S. Interior Department. This is a significant drop from the $18.24 billion collected in fiscal 2023 and marks the lowest total since 2021—the first year of President Joe Biden’s administration. However, despite the decline, it still stands as the fourth highest annual revenue figure since 1982.
Biden has overseen record domestic oil and gas production while simultaneously enacting policies to curb new leasing on federal lands and transition away from fossil fuels. With an emphasis on promoting cleaner energy sources, the administration has tightened regulations and limited opportunities for new leases, which directly impacts revenue. The complex balancing act between increasing energy production and moving towards renewable energy has resulted in less federal income from new leasing, as evidenced by the decline in leasing bids.
President-elect Donald Trump, however, has signaled a potential change in direction, promising to maximize oil and gas production by loosening regulations. The prospect of increased production and deregulation is likely to have a significant impact on federal and state revenue from energy production.
Breaking down the numbers, $16.45 billion was disbursed to federal, state, local, and tribal governments from energy production in the year ending in September. Of this, the Treasury received $6.3 billion, while $4.3 billion went to state and local governments. Among states, New Mexico received the largest share at $2.88 billion, far surpassing Wyoming’s $590.9 million and Louisiana’s $163.47 million.
One of the major factors contributing to the decline in revenue was the sharp drop in natural gas production earnings, which decreased by 62% to $1.1 billion due to softer prices. In contrast, revenue from oil production rose by a modest 4%. This disparity highlights how price volatility in natural gas affected overall federal revenue, while oil prices offered a slight cushion.
Another telling sign of the current landscape is the revenue from winning bids for new leases, which fell by 54% to $521 million. This significant reduction points to the slowdown in new leasing as fewer companies are willing to commit large sums amid tighter regulations and uncertainty about the future of fossil fuel projects on public lands.
Several factors could explain the decline in federal revenue. First, the Biden administration’s focus on reducing the environmental impact of fossil fuel production has created a challenging regulatory environment, making it harder for companies to acquire new leases and invest in drilling activities. Additionally, global energy markets have seen fluctuations in natural gas prices, which significantly affected income from natural gas production. The overall market environment, characterized by a shift toward renewables and a push for net-zero emissions, has also tempered enthusiasm for investments in fossil fuels.
The latest numbers reveal the delicate balance between encouraging energy independence through domestic oil and gas production and pursuing ambitious climate goals. The drop in federal revenue from energy production on public lands serves as a reminder of the challenges that come with navigating the transition to cleaner energy while also meeting economic and energy needs. As the incoming Trump administration looks to relax regulations and boost oil and gas output, the industry could be headed for another shift—one that might reverse the recent revenue decline but at the potential cost of environmental progress.
