Energy payments to states in US West plummet in 2020

Associated Press

BILLINGS, Mont. (AP) — Payments to states in the U.S. West have plummeted for oil, natural gas and coal extracted from U.S. lands after low crude prices and the pandemic slowed drilling and mining in many areas in 2020, according to federal data.

Nationwide, payments to states for drilling on public lands and in U.S. waters were down by $630 million, or about 26%, in fiscal year 2020 compared to the previous year, revenue data released by the U.S. Department of Interior on Friday shows.

New Mexico suffered the biggest fiscal hit, with U.S. government disbursals for energy production dropping about 40% to $707 million in 2020, the data shows. That compares with almost $1.2 billion in 2019.

Private energy companies pay the federal government for the right to drill for fossil fuels on public lands and in U.S. waters. They also pay royalties based on how much oil or gas they produce. The money is split between the U.S government and the state where the drilling occurred.

That proved highly lucrative as drilling in the U.S. West boomed in recent years and the payments helped boost state coffers used to pay for schools, roads and other services.

As revenues dropped, states that depend heavily on money from energy production, including Wyoming and New Mexico, have grappled with major budget shortfalls.

Wyoming Gov. Mark Gordon last month asked lawmakers to slash $500 million in response to weak revenue from coal, oil and natural gas.

Wyoming saw its payments under the government’s revenue sharing arrangement decline almost 30% in 2020 to $457 million, compared to $641 million in 2019.

North Dakota, Colorado, Utah, California and Montana also saw double-digit percentage drops in revenue.

Several Gulf Coast states experienced revenues increases in 2020.

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