Biden Administration Finally Released Its Leasing Review But It Won’t Decrease Uncertainty, High Energy Prices

The U.S. Department of the Interior finally released its long-awaited report on its review of the federal oil and natural gas leasing program on Friday, as much of the country was off enjoying the holiday weekend.

The report, which was required by President Biden’s Executive Order 14008 in January and had been promised in ‘early summer,’ includes several vague recommendations but isn’t providing much hope for American consumers burdened by sky high energy prices.

In fact, Interior’s report calls for making domestic energy production even more expensive and cumbersome, and without any actual policies, only adds to the uncertainty already plaguing the federal oil and gas program.

As Dan Naatz, Executive Vice President of the Independent Petroleum Association of America, said:

“At a time when Americans continue to struggle with high prices and inflation for everything from food to fuel, today’s report from the Department of the Interior makes little sense. Instead of looking for ways to responsibly increase the amount of oil and natural gas the United States produces from our nation’s onshore and offshore federal lands, the Biden Administration continues to rely on tired arguments that do not tell the true story of mineral development on America’s federal lands.

“Independent oil and natural gas producers are committed to responsibly producing oil and natural gas from federal lands. We will continue to work with the federal government, state and local officials to allow America’s oil and natural gas explorers and producers to continue to provide the resources Americans need. Today’s report is another example of the Biden Administration missing the mark on addressing the energy needs of our nation.”

What was released on Black Friday – months after it was promised – was a mere 18 pages of recommendations with no actual policy guidelines for the future of the program. Although this was outlined by Interior earlier this year as a “interim review,” [i.e. a draft report] on Friday the department said “the report completes the review of the federal oil and gas programs called for in Executive Order 14008.”

In other words, Interior’s “extensive review” that took 10 months to complete and included “robust engagement with state and local officials, members of Congress, and Tribes, as well as from a wide range of interests including the oil and gas industry, conservation groups, labor unions, Indigenous organizations, and the general public,” according to the department, does little to decrease the uncertainty that the administration’s illegal leasing ban has caused since January with no clear indication of what will come next.

Notably, key details weren’t the only thing lacking from the report: Despite the review being required as part of the president’s aggressive plans to reduce U.S. emissions, as the New York Times puts it in its headline: “Interior Dept. Report on Drilling Is Mostly Silent on Climate Change”.

More Expensive Energy

Right now, the United States and the rest of the world is in the midst of an historic energy crunch. Gasoline prices recently hit a seven-year high and home heating costs will be 30 percent above the average this winter. As the American Petroleum Institute’s Frank Macchiarola said:

“During one of the busiest travel weeks of the year when rising costs of energy are even more apparent to Americans, the Biden Administration is sending mixed signals again. Days after a public speech in which the White House said the president is “is using every tool available to him to work to lower prices and address the lack of supply,” his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing.”

The report calls for higher royalty rates, rental rates and minimum bids, but all of these actions would make it more expensive to produce energy on federal lands, resulting in higher prices for consumers.

Meanwhile, the Senate is set to begin negotiations on a reconciliation package that would make Interior’s recommendations law, crippling U.S. producers and sending prices even higher for Americans via a tax on natural gas.

Further, the Department of Justice is still in court arguing for the illegal leasing ban to be reinstated and the administration is releasing oil from the U.S. Strategic Petroleum Reserve – a move that may temporarily, slightly bring down prices but ultimately won’t offer long-term solutions or significant decreased prices.

Interior’s report claims that the current federal oil and gas program “inadequately accounts for environmental harms to lands, waters, and other resources [and] fosters speculation by oil and gas companies to the detriment of competition and American consumers,” ignoring that the United States is leading the world in carbon emissions reductions – thanks to natural gas – and is pioneering the breakthrough technologies to make even bigger environment progress. Yet the administration has no issue with asking OPEC+ countries, that don’t have anywhere near the same high environmental, labor, and human rights standards as the United States, to increase their oil production to solve domestic energy price issues.

Moreover, it was the competition from the shale revolution that took place here at home that has kept prices low for consumers – as even Barack Obama admitted.

Interior’s long-awaited report is finally available for the public to see, but it does nothing to provide relief from the cloud of uncertainty over the federal oil and gas program, and could actually exacerbate the problem of rising energy costs.

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