Joe Biden resumes oil and gas leases on federal land

The Biden administration will resume leasing oil and gas on federal lands as it comes under increasing pressure to reduce high petrol prices, far from a freeze that has angered industry executives.

About 144,000 acres of public land will be put up for sale next week, the Interior Department said on Friday, marking the end of a moratorium on new leases by the president in one of his earliest acts in office. In June last year, a federal court in Louisiana ordered the Biden administration to restart the leasing program.

The new leases would charge oil and gas producers higher royalty payments than before – 12.5 percent compared to 18.75 percent earlier – and would significantly cut the amount of land auctioned compared to land sought by industry .

“Today, we all begin to reset what we believe to be the highest and best use of Americans’ resources for the benefit of present and future generations,” said Interior Secretary Deb Haaland.

The move comes at a time when President Joe Biden finds himself under political pressure over high fuel prices, which have driven rising inflation. The national average price of gasoline on Friday was $4.07 a gallon, down from a high of $4.33 a gallon the previous month, but still 70 percent higher than when the president took office.

Biden has pulled various levers at his disposal in an effort to drive down prices. Earlier this month he announced an unprecedented release of 180 million barrels of crude from the government’s strategic reserves, which contributed to the recent slump in global oil prices.

He has also leaned on allies in the Gulf and US oil and gas producers to increase production, though without much success. The lease announcement comes just days after the administration’s latest attempt to lower prices by lifting seasonal restrictions on ethanol blends in petrol.

The energy crisis has taken precedence over the administration’s climate agenda in recent months, to the dismay of environmentalists.

Combating climate change was central to the president’s election campaign, and he pledged on the road that there would be “no more drilling” on public land if elected. In January 2021, he signed an executive order stopping the sale of new leases on the country’s 245mn acres of public land pending review. A report published by the Interior Department last November suggested the system should be overhauled.

Analysts say oil and gas production from federal offshore lands accounts for less than 10 percent of total US production and that resuming leases will take months if not years of new production expected to make a big difference to global oil prices. is unlikely.

Frank Macchiarola, senior vice president of the American Petroleum Institute, the oil industry’s largest lobbying group, said he welcomed the resumption of leasing, but added that withdrawing acreage and raising royalty rates would “inhibit oil and natural gas investments on federal lands.” may be discouraged”.

“We are concerned that this action adds new barriers to increased energy production, including the removal of some of the most important parcels,” Macciarola said.

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