The Biden administration released a plan to “reform” the nation’s federal leasing program for oil and gas drilling, which recommended limiting the available areas for new drilling and imposing higher costs on energy companies, even as Americans struggle with the growing energy crisis.
The report, conducted by the Interior Department, is the final product of a review ordered by President Joe Biden in January. Biden signed an Executive Order at the time ordering the federal government to suspend drilling on federal land pending a review to address environmental concerns.
The report recommends that the federal government increase royalty rates for oil and gas drilling above the current rate of 12.5%, which is significantly less than many states and private landowners charge drilling companies to lease on their land. If implemented, the rate hike would be the first in 100 years, according to The Associated Press. The report also recommends an increase in the bond payments that oil and gas producers pay in advance for future cleanup operations from drilling new oil wells. Those rates have also not been raised in decades, according to the AP.
Furthermore, the report recommends that the Bureau of Land Management tighten potential new leases to areas that have high potential to produce oil and gas, and that are in close proximity to oil and gas infrastructure that already exists.
The AP also noted that the federal government conducted a sale of new oil and gas reserves in the Gulf of Mexico last week, after a group of Republican state attorneys general sued to lift the suspension, with major energy companies putting up $192 million for offshore drilling rights in the Gulf. The administration is also proceeding with a sale early next year for drilling rights in several Mountain West states, including Wyoming, Colorado, and Montana.
The report’s recommendations drew criticism from progressive environmental organizations, who demanded that Biden fulfill a promise he made during the campaign to stop oil and gas leases on federal lands permanently. Energy industry officials and Congressional Republicans also warned that the report would lead to even higher energy costs. The American Petroleum Institute said in a statement, via the AP, that if implemented, the recommended policies would “increase costs on American energy development with no clear roadmap for the future of federal leasing.”
“We know the real story,” Republican Arkansas Congressman Bruce Westerman, the ranking member of the House Natural Resources Committee, told the AP. The recommended policies “will bog small energy companies down in years of regulatory gridlock, place millions of acres of resources-rich land under lock and key [and] ignore local input,” he said. “Ultimately, the American consumer will pay the price. Look no further than the skyrocketing prices you are already paying at the gas pump.”
The average cost for a gallon of gas currently sits at $3.40, according to AAA, more than $1.25 higher than in 2020. The Biden administration recently released some 50 million barrels of oil from the United States Strategic Petroleum Reserve, but that amount only accounts for about 2.5 days worth of demand, as previously reported by The Daily Wire. The move drew criticism from moderate Democrats like West Virginia Senator Joe Manchin, who called the move a “policy Band-Aid” and called on the administration to restart the Keystone XL pipeline and to “responsibly increase energy production here at home.”
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