Did you know that one-quarter of all oil produced in the U.S. comes from government-owned land and offshore areas?
That’s right—while we often picture oil rigs in remote deserts or private oil fields, a massive part of the U.S. energy supply actually comes from public land managed by the federal government.
It's a surprising story that affects not only energy prices but also government income and land use across the country.
America: The World’s Top Oil Producer
Since 2018, the U.S. has been the largest oil producer in the world, and production is still climbing. According to the U.S. Energy Information Administration, by 2024, the country’s crude oil production could reach 13.2 million barrels per day. Out of this huge amount, about 25% comes from federally owned land and offshore waters. That’s a big slice of the oil pie—and most of us never realize it.
What Exactly Is “Government-Owned Land”?
The U.S. federal government owns about 28% of all land in the country—that’s over 600 million acres. These lands include mountains, forests, deserts, plains, and ocean areas, spread across every state. The Bureau of Land Management (BLM) is in charge of most of these areas, including the resources found underground like oil, gas, and minerals.
The Government Doesn’t Drill—Private Companies Do
Now, you might wonder: does the government run oil rigs? The answer is no. Instead, private energy companies lease the land. They pay the government fees and royalties in return for the right to extract oil and natural gas. The system works like a landlord-tenant relationship, where the government owns the property and private firms use it for oil production.
Production Has Grown—A Lot
Over the past 10 years, oil output on federal lands has increased by about 70%, according to data from the Office of Natural Resources Revenue. The biggest growth happened onshore, where production rose by 200%. This trend shows just how important public land has become in the national energy landscape.
Where Is All This Oil Coming From?
As of 2021, the federal government had leased around 25 million acres of land to oil and gas companies. These areas are mostly located in the Midwest and Western U.S.. Here are the top five states by leased land area:
- Wyoming: 8.07 million acres
- New Mexico: 4.3 million acres
- Alaska: 2.64 million acres
- Utah: 2.5 million acres
- Colorado: 2.36 million acres
If you’ve traveled through any of these places, you may have passed by some of the country’s biggest energy sources without even realizing it.
New Leasing Rules Mean More Money
In 2022, the Inflation Reduction Act changed the way land leases work. Before that, rental prices were low—only $1.5 per acre per year for the first five years. After the law passed, the new fees became:
- $3 per acre per year for the first two years
- $5 per acre for the next six years
- $15 per acre after that
In addition, royalties increased from 12.5% to 16.67% of the oil revenue. These new rules took effect in October 2023, meaning the government is now earning much more money from leasing its land.
Why Should We Care?
This story isn’t just about oil—it’s about how our country uses its land and resources. The money earned from leasing public land goes into government programs and supports communities. Plus, decisions about where and how to drill affect local environments, job markets, and even energy prices.
Looking Ahead
As demand for energy continues and regulations change, federal lands will play an even bigger role in America’s energy future. We may see more investments in technology, cleaner production methods, and public discussions about land use. The balance between energy, environment, and economics is more important than ever.
What Do You Think, Lykkers?
Were you surprised to learn where so much of the U.S. oil actually comes from? We were too. It’s a reminder that there’s a lot more happening behind the scenes when it comes to energy. Share your thoughts or questions—we’re excited to hear from you and explore more topics together. Let’s stay curious and keep discovering the hidden sides of everyday life!
How The U.S. Is Pumping More Oil Than Any Country In History
Video by CNBC
