Most Utahns pay attention to the price of oil only as far as the gasoline pump where they fill up their car.
But oil prices, along with natural gas prices, may soon play a much bigger part of our lives.
They could very well determine whether our state government finds itself with $1 billion yearly surpluses, or $100 million budget deficits.
Whether our school children are taught in classes of 20, or classes of 40.
Even whether our state income taxes go up, or our sales tax is cut.
Over the next several years our Utah state legislators and our governor will have to decide whether to roll the dice and seek state ownership of 31 million acres of land now held by the federal Bureau of Lands Management and the national forests inside our state.
A special public lands stewardship commission Wednesday heard a lengthy, and detailed, summary of a new $500,000 report on the financial costs and benefits to state government should it get control of these federal lands.
Bottom line, said Assistant Attorney General Tony Rampton, is this:
— It will cost the state $280 million to take over control of, and management of, the fed’s 31 million acres in Utah.
— 83 percent of new revenues coming to the state from these lands are oil and natural gas royalties.
— If the price of oil averages $92 a barrel – the new study’s “high end” model – then in five years Utah state government will be getting $1 billion a year in excess revenue.
— If the price of oil drops to $62 a barrel – the new study’s “low end” model – then in five years the state will run $100 million short of the $280 million it will be costing us to manage those former federal lands.
The price of a barrel of oil has dropped to $70 a barrel in recent weeks. But Rampton – and the study – says that the likelihood of oil rising up to $92 a barrel (on average) is still good.
So, we see a $1 billion annual profit, or a $100 million loss, in Utah getting control of federal lands.
Those are the costs legislators who make up the newly-formed Public Lands Stewardship Commission will be considering over the next several months.
Some Democrats don’t like those odds, saying there are many more factors state leaders need to consider.
Legislative Republicans are drooling over those numbers – for the new study shows that state leaders can take over those lands with little downside, and a lot of upside.
Said Rampton: “We know the history, the hard facts” of the $280 million the feds are paying each year to manage those 31 million acres, which include mostly BLM and national forest service lands, but not national parks, monuments (except the Grand Staircase Escalante National Monument) and military bases.
To estimate how much Utah will gain in new tax revenue from those federal lands, “You have to rely on the modeling we did” in the exhaustive, 784-page report written by economists and public land experts at three Utah universities.
The whole report is here.
A 27-page analysis of the report, put together by Gov. Gary Herbert’s public lands office, is here.
Rampton, who heads the AG’s public land division, has worked on land issues for years. He helped oversee the research done by experts at the University of Utah, Weber State University and Utah State University.
He said the report is “absolutely” unbiased, but should be read in its entirety for a full understanding of the “extremely complex” issues of public land management in Utah.
Any special interest group can take out snippets of the report, cite those to make about any point they want, he added.
Overall, he said, the benefits of the state getting control of the fed’s 31 million acres far outweigh the risks of the state ending up losing money on the deal.
Even if the state were to see some years of $100 million budget deficits because of the land swap, the Legislature could deal with those, make changes in how the lands were managed or try to find other land-related sources of revenue – like a state royalty on coal extraction.
In any case, said Rampton, Utahns concerned over the land transfer should not worry about the Legislature and governor selling off newly-acquired federal lands to make ends meet.
First off, said Rampton, federal law says if the state sells any previously federal land, the feds get 95 percent of the money.
It would make no sense for the Legislature to sell land to just get 5 percent of the profit.
Much more can be made from any state lands by keeping it in state hands, he said.
Much of the discussion Tuesday concerned two areas: The cost of fighting public land wildfires in Utah and the price of oil, and where that may go over the next decade.
The study researchers said while the cost of fighting wildfires has exceeded expectations in recent years, Utah should be able to take over that cost on federal lands.
Republicans on the commission painted a rosy picture, saying federal national forest administrators – hampered by any number of unreasonable regulations – have not been able to manage the forests in ways that both discourage wildfire and make profits from them, mainly through logging.
Rep. Joel Briscoe, D-Salt Lake, raised a number of concerns about Utah taking over the annual $83 million cost of fighting wildfires on federal land in the state.
Rep. Mike Noel, R-Kanab, said on relatively few state acres Utah today makes a profit on proper timbering. And that by clearing out underbrush, building logging roads (which provide firefighting access), tree thinning and other forest management tactics, under state management national forests could become more resistant to wildfire while reinvigorating Utah’s lagging timber industry.
“Wildfire costs are substantial,” said Rampton. “And they will remain so. Even if the state cleans up the forests” making them less vulnerable to a major wildfire, “those costs are going to be there. But we included those costs in our estimate of the $280 million” it will cost Utah each year to manage the federal lands.
The Democrats’ concerns over Utah state government getting control of the federal lands, and the Republicans’ strong desire to get those lands, is reflected in a UtahPolicy/Dan Jones & Associates poll conducted several months ago.
Among all Utahns, 53 percent said the state would do a better job of public land management, while only 24 percent said the federal government would.
But the difference of opinions between Democrats and Republicans is huge.
Jones found that 69 percent of Republicans want the state to manage public lands, while only 6 percent wanted the federal government to it.
Two-thirds of Democrats want the federal government to manage public lands in Utah, with only 23 percent saying the state should.
That shows Democrats don’t trust a Republican governor and the Republican-controlled Legislature to manage newly-acquired federal lands, while Republicans do trust their party officeholders to do the job.
