The Interior Department recommended that the Biden administration consider raising royalty rates for oil and gas drilling leasing on federal lands, a move aimed partly at addressing climate change even as the White House also grapples with high gas prices and inflation.
In an 18-page report, Interior officials said the royalty rates the government charges private drilling companies haven’t been raised for 100 years and that the current 12.5% surcharge on profits “shortchanges taxpayers.”
“The Interior Department has an obligation to responsibly manage our public lands and waters — providing a fair return to the taxpayer and mitigating worsening climate impacts — while staying steadfast in the pursuit of environmental justice,” Interior Secretary Deb Haaland said in a statement Friday.
Oil and gas producers paid more than $8.5 billion to the federal government in rent, royalty and other charges in 2019. Raising the cost of drilling on federal lands could add to cost pressures on gas prices, which have climbed more than 50% in the past year.
The American Petroleum Institute accused the administration of sending “mixed signals” on fuel prices, following President Biden ordering the release of 50 million barrels of oil from the U.S. Strategic Petroleum Reserve in a coordinated bid with countries around the world to increase supply and lower prices at the pump.
“Days after a public speech in which the White House said the president 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,” said Frank Macchiarola, API’s senior vice president of policy, economics and regulatory affairs.
The long-awaited report stops short of recommending an end to oil and gas leasing on public lands, as many environmental groups have urged. But officials said the report would move toward a more “responsible” leasing process that provides a better return to U.S. taxpayers for oil and gas drilling on the nation’s vast public lands and waters.
The report completes a review ordered in January by Mr. Biden, who directed a pause in federal oil and gas lease sales in his first days in office, citing worries about climate change.
The moratorium drew sharp criticism from congressional Republicans and the oil industry, even as many environmentalists and Democrats said Mr. Biden should make the leasing pause permanent.
The new report seeks a middle ground that would continue the multibillion-dollar leasing program while reforming it to end what many officials consider overly favorable terms for the industry.
The leasing program has drawn renewed focus in recent weeks as gasoline prices have skyrocketed and Republicans complained that Biden policies contributed to the spikes, policies that include the leasing moratorium, the rejection of the Keystone XL oil pipeline and a ban on oil leasing in Alaska’s Arctic National Wildlife Refuge.
• This story is based in part on wire service reports.