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U.S. Interior Dept. Allows Oil and Gas Leases in Policy Reversal

April 18, 2022 by Tom Ramstack
This Feb. 26, 2021, file photo shows an oil well east of Casper, Wyo. The Biden administration is raising royalty rates that companies must pay for oil and natural gas extracted from federal lands as it moves forward under court order with sales of public fossil fuel reserves in nine states. (AP Photo/Mead Gruver, File)

WASHINGTON — The Biden administration plans to auction oil and gas leases this week in a policy reversal intended to bring down the price of fuel for consumers.

The leases would open 144,000 acres to corporate oil and gas extraction, despite the fact President Biden pledged to ban drilling on public land shortly after taking office.

Environmentalists are warning the move would contribute to climate change but Biden says rising inflation and risks of recession leave few better options.

Gasoline prices are up 70% since Biden took office last year to over $4 a gallon.

An added factor is Russia’s invasion of Ukraine, along with the disruption of fuel to western Europe and economic upheaval that is spreading worldwide.

In addition to lowering fuel prices, the Biden administration anticipates more revenue for the federal government from royalties the oil companies would pay.

They have been paying 12.5% on oil and gas extraction but the U.S. Department of the Interior recommends raising the rate to 18.75%.

“Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations,” Interior Secretary Deb Haaland said in a press release on Friday.

The Bureau of Land Management released details Monday of the land available for drilling leases. It is located on 173 parcels in nine western states.

The agency originally considered allowing the leases on 733,000 acres of land but downgraded the area to 144,000 in an effort to protect wildlife and the environment.

Haaland explained the downgrade by saying, “How we manage our public lands and waters says everything about what we value as a nation. For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands.”

Environmentalists’ pressure to more closely consider climate and wildlife in the leases was given added momentum by a judge’s ruling in January.

A federal judge in Washington, D.C., canceled oil and gas leases the administration decided last year to allow on more than 80 million acres in the Gulf of Mexico. He largely agreed with arguments presented in a lawsuit by the environmental group Friends of the Earth.

They argued the original Biden administration proposal for leases violated the National Environmental Policy Act. The 1970 law requires federal agencies to review the environmental consequences of their actions with a goal of not adding to pollution.

When the Interior Department last week announced the new opportunity for oil companies to acquire the leases, the oil industry trade group Western Energy Alliance only mildly hailed the decision.

“While we’re glad to see BLM is finally going to announce a sale, the extreme reduction of acreage by 80%, after a year and a quarter without a single sale, is unwarranted and does nothing to show that the administration takes high energy prices seriously,” said Western Energy Alliance President Kathleen Sgamma.

She cautioned that the higher royalty fees were the equivalent of a tax that would be passed on to consumers.

She also said any benefits to consumers could be years away.

“Environmental groups regularly protest parcels and it can take BLM months to clear those protests before they issue the leases,” Sgamma told The Well News. “It’s likely several months before companies can even start any work on the leases, and then most leases will require additional environmental analysis, which can take months to years for BLM to complete.”

A Friends of the Earth statement accused Biden of betraying his promise to cut greenhouse gas emissions. The organization also said the result would be windfall profits for petroleum companies

“The oil and gas industry continues raking in record profits while communities pay the price,” Friends of the Earth said in its statement.

The United Nations’ Intergovernmental Panel on Climate Change reported last week that international efforts to keep global warming below 1.5 degrees Celsius, or 2.7 degrees Fahrenheit, are becoming unattainable without drastic policy changes.

Oil and gas drilling on federal land and offshore produces nearly one quarter of U.S. greenhouse gas emissions, according to environmentalists.

Tom can be reached at tom@thewellnews.com.

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