The Federal Real Property Council in 2006 appraised the value of federal land, buildings, and infrastructure at $1.3 trillion. As large as this estimate is, one class of assets not included in that inventory would likely bring in far more revenue: deposits of oil, natural gas, and coal on federal property, onshore and offshore. This includes technically recoverable resources totaling 1,194 billion barrels of oil and 2,150 trillion cubic feet of natural gas. At 2016 average prices (oil: $43 per barrel; natural gas: $2.42 per thousand cubic feet) this amounts to about $55.6 trillion, or almost 2.8 times the size of the U.S. national debt.
Any estimate of revenues from federal asset liquidation is, of course, problematic: A large and rapid sell-off would significantly affect asset prices; moreover, prices don't exist in the absence of buyers and sellers. Nevertheless, revenue estimates may help policymakers by proving a rough indication of the potential value of various assets in relation to one another.
They make it sound as if, at those prices for oil and natural gas, the government would get $55.6 trillion.
But wait. If a company thinks it can sell a barrel of oil at $43, then it would be foolish to buy the right to recover for $43. The oil is sitting there, in situ, and has not been extracted. So let's say that the cost of recovery is $30. Then the company would not be willing to pay more than $13 ($43 minus $30) for the right to the oil.
I had wondered if the authors were simply giving the $55.6 trillion as a way to signal the reader that the number is big and were not meaning to imply that the government could get the full $43 for a barrel of oil. But Shughart confirms by email that he indeed is saying that if the market price of oil is $43, someone would be willing to pay $43 for the right to recover the oil.
To be clear, I'm not saying that their proposal is not a good one. It is. But Shughart and Close have substantially overstated the expected federal revenues from selling oil and natural gas.