Biden Administration Begrudgingly Resumes Oil and Gas Leases

Last month, the Biden Administration announced it would open 144,000 acres of federally-owned lands for new oil and gas leases. Opening these lands to support America’s energy needs is a good thing, but it shouldn’t have taken the Biden Administration so long to see the wisdom of opening new lease sales. Unfortunately, the administration’s feet dragging on energy leases is just one more example of the kind of thinking on energy that has plagued American energy production since President Biden’s first week in office. 

One of President Biden’s first actions in office was to ban future oil and gas leases on federal lands. At the time, we noted that the economic impacts of his unilateral decision would be staggering. The record hasn’t lied. Combined with the international effects of the war in Ukraine, gas prices have soared, hurting consumers and sowing pessimism about America’s energy future.

Thankfully, Louisiana Federal Judge Terry A. Doughty struck down the ban after multiple states filed suit. Judge Doughty noted that current federal law requires the Department of Interior to auction federal oil and gas leases. Therefore, without changes to the law made by Congress, President Biden’s moratorium lacked legal authority.

The new lease sale will offer 225 square miles of federal lands in nine states, including Wyoming, Colorado, Utah, New Mexico, Montana, Alabama, Nevada, North Dakota, and Oklahoma. However, the parcels represent about 30% less land than officials had proposed for sale in November and 80% less than the industry initially desired.

You’d think the Biden Administration would be pleased to announce the sale since it has been calling on domestic oil producers to ramp up supplies in the wake of skyrocketing gas prices and criticizing them for not getting prices down quickly enough. Not so much. 

White House Press Secretary Jen Psaki made it clear that the Administration’s policy is to “ban additional leasing” and that the court ruling was “forcing their hand.”

The White House’s position was only reinforced by a 50% increase in royalty rates for new leases, jumping to 18.75% from 12.5%. This sharp increase and the decreased size of the sale seem to indicate that the Administration is actively discouraging investment in new leases. Why discourage new oil and gas supplies at a time when energy prices are high?

“U.S. energy resources are the envy of the world and a long-term strategic asset that strengthens our national security and fuels our economy,” says Frank Macchiarola, senior vice president of policy, economics, and regulatory affairs for the American Petroleum Institute. 

“We are pleased to see the Interior Department finally announce a restart to the long-delayed onshore leasing program required under the law, but we are concerned that this action adds new barriers to increasing energy production, including removing some of the most significant parcels.”

U.S. energy development is key to America’s economic growth and the strengthening of our geopolitical security as nations like Russia continue to flex their muscles using their energy supplies. Development is the solution to combating skyrocketing energy prices that hurt consumers here at home and keep European nations and others in the grip of bad actors like Russia. The Biden Administration should be pleased to offer federal leases that will stimulate the economy and get things back on track after two years of the Covid 19 pandemic and energy shortages. It’s good news worth celebrating.