Leasing Federal Land to Big Oil is a Slippery Political Tightrope
Environment Policy Brief #141 | By: Todd J. Broadman | May 5, 2022
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The Interior Department will put up for auction 144,000 acres of federal land to oil and gas companies. The Department says that this lease sale is actually scaled back by 80 percent of the original acreage slated for potential drilling. 90 percent of the land to be leased is located in Wyoming. In tandem with the sale, royalties paid to the federal government on any revenue that result from new drilling will go up from 12.5 percent to 18.75 percent.
Russia accounts for about 10 to 12 percent of global oil production. After Russia invaded Ukraine, a series of increasing economic sanctions were placed upon Russia. Less than 4 percent of U.S. oil comes from Russia, and therefore the Russian oil ban that Biden imposed at the beginning of March is of little consequence. The global price of oil though has spiked and has placed pressure on the administration to take action. The citizens are feeling it at the pump.
The action to open up more federal land to oil exploration is in direct variance to Biden’s 2020 campaign pledge: “no new oil and gas permitting on public lands and waters.” By the end of Biden’s first year in office, the total number of onshore oil and gas leases was 35,871, with 23,803 actively extracting oil. The bulk of them are located in the states of New Mexico, Wyoming, and Colorado. The Bureau of Land Management (BLM) manages these leases and royalties, which in are in excess of $4 billion annually.
Meanwhile, the EU is far more dependent upon Russian oil. Approximately 40 percent of Germany’s demand is met by Russian production. In spite of their pledge to reduce imports by two-thirds by the end of 2022, the EU as a whole nearly doubled the value of their oil imports from Russia during March and April.
Many are questioning the sincerity of Biden’s commitment. “We urge the Biden administration to take advantage of this historic opportunity to make good on campaign promises, fulfill a global commitment to acting on climate, and serve American communities,” says Dan Ritzman, Lands Water Wildlife director at the Sierra Club, “by phasing out oil and gas production on public lands and oceans.” Although a moratorium on new fossil fuel leases is a nod in the right direction, researchers point more towards a sizable reduction on the demand side if CO2 reduction targets are to be met.
While consumer groups are complaining about prices at the pump, big oil lobbyists along the beltway have been more active in recent months. Koch Industries was the biggest influence peddler last quarter: spending nearly $3.3 million. They also said that they would be maintaining their operations in Ukraine. Occidental Petroleum and Exxon Mobil are also more active. The intensity of industry pressure led Jeremy Nichols, of WildEarth Guardians, to comment that “While the Biden administration talks a good talk on climate action, the reality is, they’re in bed with the oil and gas industry.”
A look at overall oil drilling and production locations in the U.S. reveal that 93 percent of fossil fuels are extracted from private rather than public federal land. This too puts the Biden commitment regarding federal lands in perspective. Even so, after Biden ordered the distribution of millions of barrels of oil from the Strategic Petroleum Reserve, Randi Spivak, of the Center for Biological Diversity, called the Administration’s actions “a reckless failure of climate leadership.”
This latest move, while viewed as a betrayal to environmentalists who voted for Biden, is also viewed as ineffective and weak by the petroleum industry. There is a gas price tipping point that will effectively stall the economy and increase unemployment.
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But given that active oil well production on a newly acquired land lease can take up to three years, there are effectively no real economic gains during Biden’s initial term to opening up federal lands. Given this reality, it is disappointing that the administration is not making much effort to decrease demand and alert the public that continued use of fossil fuel is a threat.
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