Fitzgerald, TimothyRucker, Randal R.2014-02-142014-02-142014-02https://scholarworks.montana.edu/handle/1/3090The United States is the only country in the world with widespread private ownership of minerals. This private ownership has helped make many citizens rich throughout the country’s history from strikes of precious metals and other minerals, as well as hydrocarbon resources. As the United States enjoys a Renaissance of oil production amidst the current high price environment, the ownership of oil and natural gas resources has reemerged as a critical economic force. Although private oil and gas ownership is acknowledged as an important contributor to innovation in development of unconventional resources and the technologies used to produce them (Yergin 2011), little is known about the aggregate value of private mineral interests. Usually private minerals are leased to developers in exchange for a royalty paid on the basis of gross production revenue as oil and natural gas are extracted. In this paper we estimate aggregate private oil and gas royalty incomes in recent years.The United States is the only country in the world with widespread private ownership of minerals. This private ownership has made many U.S. citizens rich throughout the country’s history from strikes of precious metals and other minerals, as well as hydrocarbon resources. As the United States enjoys a Renaissance of oil production, the ownership of oil and natural gas resources has reemerged as an important factor in determining the course of the energy industry. Private oil and gas ownership is acknowledged to be an important contributor to innovations in the development of unconventional resources and the technologies used to produce them (Yergin 2011). Little is known, however, about the aggregate value of private mineral interests or the annual income derived from them. Private minerals typically are extracted under the provisions of leases with developers that specify the royalty rate to be paid on the gross revenues from the production of oil and natural gas. In this paper we estimate private oil and natural gas royalty gross incomes in recent years, for the continental United States and the individual states therein. Our estimates indicate that in 2012 an estimated 77 percent of oil and natural gas revenue from onshore sources in the lower 48 states was from private minerals. These are substantial pieces of an extremely large pie. We estimate that in 2012 total gross revenue from oil and natural gas production exceeded $220 billion for all U.S. onshore production. This represents about 1 percent of U.S. Gross Domestic Product (GDP). The corresponding value of production from private minerals was about $161 billion in 2012, of which private royalty owners were paid $22 billion in gross compensation for their mineral property. At the state level, the largest private oil and gas royalties were received (in descending order) from production in Texas, California, Louisiana, and Oklahoma. These are states with a high proportion of private minerals, and all are among the largest-producing states. If private royalties are expressed as a proportion of total personal income in a state, a slightly different set of states is revealed to be heavily dependent on private oil and gas royalty income: North Dakota, Wyoming, Oklahoma, and Texas. The leading role of the United States in worldwide oil and gas production and technology development is often attributed to the institution of private ownership that provides companies with willing partners for development of resources (Wang and Krupnick, 2013).en-USnatural gasAgricultural EconomicsArticle