President Biden is giving up against mounting pressure, due to the rising oil and gas prices, as his administration announced to resume oil and gas leasing.
However, the president is aiming to do it with higher royalties, compared to the Trump administration.
Biden’s Massive U-turn on Oil and Gas Leases
According to the Interior Department, the government will start oil and gas leasing on federal lands.
Initially, 144,000 acres of federal land will be up for leasing as soon as the upcoming week.
The department also pledged to charge companies higher royalties for leasing; the administration raised its royalty rate from 12.5 percent to 18.75 percent.
This was a step supposed to be taken long ago by the administration to cap the rising oil prices.
Even though the administration issued a report last fall, which portrayed that land leases should be opened with higher royalty rates, Biden took no action back then.
Biden increases oil royalty rate and scales back lease sales on federal lands https://t.co/TlfCaWaJNV
— NPR Politics (@nprpolitics) April 16, 2022
However, climate activists are not happy with the decision as they immediately slammed the announcement.
They believe Biden broke his pledge to ban new drilling. The climate and energy program director of WildEarth Guardians, Jeremy Nicholas, called the measure an outright “climate denial.”
He added the Biden administration is effective in climate strategy only to the extent of talks.
For a long time, Biden remained ignorant of leasing federal lands. Even though Republican lawmakers stressed for Biden not to pause these leases, he defended his decisions more often than not.
This step of the administration eventually skyrocketed oil and gas prices in the country.
However, as the midterm elections loom and Democrats find no way to make oil cheaper, they are now ready to compromise on their ideological stance.
Biden Administration Tries to Defend the Decision
Interior Secretary Deb Haakand tried to defend the decision of the administration, claiming lower leasing prices safeguarded the interests of wealthy corporates and not the local communities.
So, the secretary continued, the prices are increased for the benefit of Americans and their future generations. With this measure, the administration is also expected to increase the distance with the progressive faction of his party.
This is due to the fact that banning federal oil leases was one of the topmost campaign promises of Biden, leading climate activists to put their weight behind him in the 2020 election.
Biden increases oil royalty rate and scales back lease sales on federal lands: The U.S. government will sharply boost royalty rates for companies as federal officials weigh efforts to fight climate change against pressure to bring down high gasoline… https://t.co/yi7c8UploY pic.twitter.com/ESamNbYl2W
— Marcus Evans 📚 ⚛️ 🔭 ⚖️ 💙 🎼 🏅 (@MarcuswevansSr) April 16, 2022
Biden amassed big donations from climate activists just to announce 15 months later that he is lifting the ban on oil and gas leases.
Despite these actions of the president, experts believe it is unlikely to bring prices down in the near future. Drilling can take years; thus, domestic production will only increase after this drilling is complete.
Many oil stakeholders are also skeptical about Biden’s decision to raise royalties.
The president of the Western Energy Alliance, Kathleen Sgamma, asserted this would discourage investors from making an investment, which is the recipe for lower oil production and hence increased prices.