April 18, 2022 |
In a major policy reversal, the Biden administration announced Friday that leases for oil and gas drilling on federal land will resume as early as this week. There’s a catch. The acreage available for the first, new fossil fuel permits offered on public lands since Joe Biden took office will be cut sharply and the production royalties increased.
Wyoming Governor Mark Gordon welcomed the news in a statement, saying that the development is “long overdue.” Wyoming is one of the oil producing states that has lost needed revenues because of the ban. The governor added that uncertainty surrounds the new leasing rules.
“While we don’t know the exact number and location of the Wyoming parcels, after 15 months without a lease sale in our state, to learn that royalty rates will be increased and available acreage significantly reduced is hardly cause for unbridled celebration.”
In opening up the new public lands for oil and gas permitting, the Interior Department will raise the royalty rates that companies must pay to the federal government from 12.5 percent of their profits to 18.75 percent, an increase that could bring in billions of dollars of new tax revenue.
The announcement to lift the ban represents the abandonment of one of Biden’s “signature” environmental policies—ending drilling on public land.
President Biden delivered on his campaign promise during his first day in office, signing an executive order halting oil and gas leases on federal land. Now with mid-term elections six-months away and natural gas prices hitting a 13-year high last week, the policy reversal smacks of a concession if not a political defeat. Only a month ago, the White House Press Secretary Jen Psaki scoffed at questions from reporters that Biden’s energy policies were hurting American consumers.
Lifting the ban won’t lower prices at the pump. It may not increase domestic production, either. The Interior Department said it would make only 144,000 acres available for oil and gas drilling through a series of lease sales, an 80% reduction from the footprint of nearly 900,000 acres that had been vetted and previously cleared for leasing.
Wyoming Senator John Barrasso said the new leasing rules announced Friday will make energy American energy more expensive and harder to produce.
“The Biden administration is still doing all it can to restrict leasing on federal lands,” said Barrasso. “First it was an illegal moratorium imposed at the start of his presidency. Now it’s this proposal to dramatically increase the cost of onshore leases while cutting the acres offered for lease.”
U.S. Oil and Gas Association President Tim Stewart compared the new rules on energy production to the inflated prices Americans are paying in every sector of the economy right now. Stewart said White House policies result in us all paying more for less.
The move to unlock some land to oil and gas leaking came a few days after a federal appeals court upheld a decision to allow a controversial climate accounting tool, that will allow the Interior Department to assess fees for what it says are the climate costs of energy production.
Stewart told Fox News on Saturday that the limited opening of federal lands at a higher production cost will not help Americans who are paying higher prices at the pump for gasoline.
The parcels of land in the leases announced Friday represent about 30 percent less than officials had proposed for sale last November and about 80 percent less than originally sought by the industry. The sales notices are to cover leasing in nine states – Wyoming, Colorado, Utah, New Mexico, Montana, Alabama, Nevada, North Dakota, and Oklahoma.
Governor Gordon of Wyoming said he’s concerned the increased production costs and reduction in the parcels will have “a chilling effect on Wyoming companies as they prepare their bids.”
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