New Analysis Finds Federal Land, Not Oil and Gas, Is Now Washington’s Most Valuable Hidden Asset

For decades, it has been tempting to think of the U.S. federal government’s “hidden balance sheet” as being propped up by underground wealth—oil, gas and other mineral rights controlled by Washington. But recent analysis applying a consistent valuation approach suggests that picture is increasingly out of date: the government’s most consequential resource asset may now be the land itself, not what lies beneath it.

Using the same basic method across time—estimating the present value of expected future revenues from federal oil and gas—researchers put the current paper value of federal petroleum rights at roughly $625 billion. That figure is not trivial. Yet in real terms it represents an extraordinary shift: it is estimated to be about 75% lower than in 1981, after adjusting for inflation. In other words, even if federal oil and gas rights still look large on paper, their economic weight relative to the early 1980s has diminished sharply.

At the same time, estimates for the market value of federal land have moved in the opposite direction. Depending on assumptions and appraisal techniques, analyses place the value of federal land holdings in a range of roughly $1.1 trillion to$1.6 trillion. The implication is stark: by this reckoning, land has become the larger line item on the federal asset ledger, overtaking oil and gas rights.

Why mineral wealth looks smaller than expected

Several forces help explain why federal oil and gas rights appear less valuable than some earlier commentators—economist Arnold Kling among them—had assumed.

First, long-run energy economics have changed. The value of a resource right is ultimately linked to expected production volumes, extraction costs, royalty and tax terms, and the future path of commodity prices. Over the past four decades, energy markets have experienced repeated price cycles and structural breaks, from the end of the post-1970s oil shocks to the rise of U.S. shale production and, more recently, heightened uncertainty around future demand growth.

Second, investor expectations increasingly incorporate energy transition risks. Even when near-term prices are strong, the long-term value of oil and gas assets can be discounted by expectations of policy tightening, technological substitution, and changing consumption patterns. Research on asset pricing has emphasized that when future cash flows become less certain—or face potential regulatory constraints—present values fall, even if current revenues remain significant.

Third, the federal government’s take is not equivalent to owning and selling the resource outright. Federal mineral rights typically generate value through leasing, royalties and related payments. Those revenues depend not only on geology but also on lease terms, administrative processes, litigation risk, and the pace of permitting and development. Valuations that apply standardized assumptions across time may therefore reveal a smaller economic claim than casual “in-the-ground” estimates suggest.

Land values rise as minerals fade

The rising value of federal land reflects a different set of dynamics. Over recent decades, U.S. real estate values have generally increased faster than inflation, especially for land near growing metro areas, recreation corridors, and regions experiencing population inflows. Even when much federal land cannot be readily sold or developed due to statutory protections, appraisals often capture option-like value: the scarcity of comparable tracts, the premium for access and amenities, and the potential for limited commercial uses.

Land’s growing relative importance also underscores a broader change in what drives wealth in advanced economies. Economists have documented that intangible assets and location-based scarcity—rather than raw extractive resources—play an increasing role in national balance sheets. Federal land, spanning vast areas and encompassing parks, forests, grazing lands and other holdings, benefits indirectly from these trends.

Rethinking the federal balance sheet

For policymakers and analysts, the new comparison matters because it reframes debates about what the government “owns,” what it could monetize, and what risks it carries. If mineral rights are less valuable than previously assumed, proposals that implicitly treat federal hydrocarbons as a giant fiscal backstop may be overstated. Conversely, the scale of land value invites harder questions about management: how to balance conservation, recreation, tribal and local interests, and revenue-generating uses, while acknowledging that land’s economic footprint is now central.

The numbers also highlight the danger of treating public assets as static. Resource valuations move with prices, technology, legal frameworks and social priorities. What looked like an era-defining store of value in 1981—federal oil and gas—now appears, on comparable terms, far less dominant than the ground it sits under.

Why it matters

Understanding what U.S. public assets are worth influences budget narratives, energy policy and debates about fiscal sustainability. If land now outweighs federal mineral rights, decisions about land management and access carry larger economic stakes than many assume. It also suggests that the federal “resource dividend” may be less reliable over the long run, just as energy markets and climate policy are becoming more uncertain.