Just a few weeks ago, the White House announced that the Biden administration would restart federal onshore lease sales for oil and gas production. It was a step in the right direction, but it falls short of the necessary policy actions needed at a time when the American people are struggling with surging energy costs and the world is looking for more oil and gas. And, the Biden administration‘s plan came with a catch: it would lease just 20% of available acreage nominated while significantly hiking royalty fees on production.
Energy production on federal lands is essential to our energy security, as well as that of our allies. In recent years, Europe has become overly dependent on natural gas from Russia. Putin’s ruthless invasion of Ukraine has led to global sanctions and our allies are looking for more American energy. The administration should be using all the tools at its disposal to increase production for both domestic and international needs.
Since coming to office, however, the Biden administration has advanced inconsistent, and sometimes even hostile, policies regarding domestic fossil fuel production. On President Biden’s first day in office, he signed an executive order that shut down the Keystone XL pipeline. His Interior Department has paused, and now significantly slowed, leasing and permitting of production on federal lands. And other agencies have advanced regulatory roadblocks to new production.
These constraints will not increase production. Instead, these policies have contributed significantly to higher energy costs for American families. In March, energy inflation hit a whopping 32%. Gasoline costs were 48% higher than they were just the year before. And home heating costs were historically high this past winter. It’s time for wholesale policy change in Washington. The administration and Congress should support policies that encourage an energy and climate agenda that supports domestic production as a means to achieve our nation’s economic, environmental, and geopolitical goals—and more energy production on federal lands is a great place to start.
Oil and gas production on federal lands is a substantial economic engine for our nation and local communities. The Bureau of Land Management (BLM) reports that in fiscal year 2019, the diverse activities authorized on BLM-managed lands generated billions in economic output across the country and supported 318,000 jobs from onshore oil and natural gas production.
All oil and gas royalty, rental payment, and bonus bid revenue is split between the US Treasury and the communities where the production takes place. Last year, onshore federal lands production yielded over $6.17 billion in revenues with $1.92 billion going to state and local governments. Each state uses revenue from energy development differently. Many allocate these funds towards public education, transportation projects, or community development.
For example, oil and gas production in Wyoming including production on federal lands contributed $1.23 billion to state and local governments in FY2020, with the largest portion of that ($542 million) supporting K-12 education. And oil and gas production is the primary source of education funding in New Mexico.
It also helps us achieve our environmental goals. Increased natural gas production is essential as Washington looks at ways to address a changing climate. Since 2000, the United States has become the world leader in carbon dioxide emission reductions. The principal reason for this reduction was replacement of coal with clean burning natural gas for power generation. Our companies are leading the way in continuing to find cleaner ways to produce both oil and natural gas.
Additionally, royalties from natural gas and oil production on federal lands help fund national conservation efforts. The 2020-passed law, the Great American Outdoors Act, allocates half of all miscellaneous receipts from energy development revenues to the restoration of national parks and public lands.
Encouraging production on federal lands should be part of an “all of the above” energy strategy. The Obama administration did as well. At this point in President Obama’s presidency, over 44 onshore leases sales had already been held with each sale offering numerous individual leases.
The Biden administration should also consider reversing their announced increase of royalty rates. A 50% increase, coupled with the extensive cost and time associated with federal permitting and the high risk of litigation, will reduce the value of federal lands opportunities. Washington should seek ways to make American energy production more affordable, lease opportunities more competitive, and reduce further uncertainty.
The world’s need for energy is only increasing—dramatically. Almost 2 billion people today have no access or only limited access to electricity. The world population is expected to increase by another 2 billion people over the next 30 years.
Our nation is blessed with abundant natural energy resources and many of these are from federal lands. America’s oil and natural gas producers stand ready to work with Congress and the Biden administration to provide affordable, reliable, and clean energy, which will also help to make the world a better and safer place.
• Anne Bradbury is CEO of the American Exploration and Production Council (AXPC), which represents America’s largest independent oil and natural gas exploration and production companies. Anne joined AXPC from the Duberstein Group, where she was a Partner. Prior to Duberstein, Ms. Bradbury served as one of the top legislative strategists and technicians in Congress as Floor Director to two successive Speakers of the House of Representatives and Deputy Floor Director in the Offices of both the Majority and Minority Leader. During her decade-long career on Capitol Hill, Bradbury was instrumental in the implementation and adoption of major rules packages and legislative initiatives ranging from reforms to national security and intelligence policy to health care, energy, transportation, trade, and education policy passed by the House of Representatives.
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