The oil and gas industry has tried to pin extreme market volatility on the clean energy transition and higher prices on government policies restricting fossil fuel production.
The claims are unfounded, and are cynical attempts to tarnish climate policy. Indeed, the Biden administration has permitted drilling on federal lands at a faster pace than any of his predecessors, backtracking on a campaign promise and undermining his own climate goals.
Fight over public lands
In his first few days in office, President Biden signed an executive order that paused new oil and gas leases on federal land and called for a review of the government’s oil and gas programs. The move was seen as a potential watershed moment, an opportunity to reorient the U.S. government’s longstanding support for a fossil fuel bonanza on public lands in favor of conservation and development of renewable energy.
Even at the outset the executive order was modest. It did not impact existing leases or drilling permits, only future development. Moreover, for the purposes of oil and gas development, the “pause” on new leases only impacted a narrow slice of the Permian basin in southeast New Mexico. Much of the nation’s oil and gas production – including nearly all of Texas – occurs on private land.
And because the industry had stockpiled thousands of leases before the announcement, drillers are sitting on a surplus of leases that amounts to several years’ worth of drilling inventory. At the same time, investors have demanded that the oil industry refrain from drilling itself into another financial crater, leaving no room for a return to excessive growth.
In short, there has been little appetite to drill new wells since the pandemic wrecked the balance sheets of most oil companies (coming on the heels of financial losses from shale drilling), but even if there was a desire to drill, the companies did not lack for access to both public and private lands.
In short, there has been little appetite to drill new wells since the pandemic wrecked the balance sheets of most oil companies.
That did not stop oil lobbyists from crying foul, pushing false claims about how the “pause” on new leases would lead to the elimination of tens of thousands of jobs, billions of dollars in revenue, and push up energy prices.
The reality is disconnected from the rhetoric that the oil and gas industry has used around the issue. Despite their claims about draconian restrictions on drilling, the Biden administration has not actually been approving drilling permits at a faster rate than the Trump administration.
The Bureau of Land Management (BLM) has permitted an average of 336 drilling permits per month so far this year, which is 35 percent higher than the 245 permits per month that BLM averaged in Trump’s first year in office, according to a report from Public Citizen. “From an environmentalist’s point of view, this doesn’t look great for Biden,” Alan Zibel, the lead author of the analysis and the research director of Public Citizen’s Corporate Presidency Project, told The Climate 202.
Last year, roughly 246 million tons of coal, 314 million barrels of oil and 3.3 billion cubic feet of natural gas were extracted from drilling and mining on federal lands, with Wyoming and New Mexico standing out as large sources of both production and greenhouse gas emissions, according to a BLM analysis cited in the Public Citizen report.
Last year, roughly 246 million tons of coal, 314 million barrels of oil and 3.3 billion cubic feet of natural gas were extracted from drilling and mining on federal lands.
“The U.S. government continues to lease land for drilling and issue permits for drilling at a frightening pace. In the coming months, energy companies are likely to mount a well-funded campaign to continue business as usual,” the Public Citizen report concluded. “Congress and the Biden administration must resist that pressure and push aggressively to move the nation – and the world – away from planet-destroying fossil fuels.”
Meanwhile, in June, a federal court said that the Biden administration could not pause new leases. The Interior Department subsequently moved forward with a lease sale in the Gulf of Mexico in November and is planning for new lease sales next year.
While the oil and gas industry has denounced restrictions by the U.S. government, and has tried to link them to high energy prices, the reality is that the industry has had nearly unfettered access to drill wherever it likes.
Betting on BBB
President Biden campaigned on freezing new leases for drilling on public lands, which would amount to ending the growth of the fossil fuel expansion. He has clearly backtracked on that commitment. The Department of Interior released its review of the federal oil and gas leasing program the day after Thanksgiving in a Friday news dump, and the review stopped far short of what Biden had promised. It called for higher royalties on leases, but made no mention of ending the expansion of new drilling. The administration says its hands are tied, citing the federal court decision from June.
The Department of Interior released its review of the federal oil and gas leasing program the day after Thanksgiving in a Friday news dump, and the review stopped far short of what Biden had promised.
But there is likely more to the story. Environmental groups and political analysts assume that the White House wanted to avoid the political blowback of confronting the oil industry, largely because it is wagering much of the Biden legacy on the Build Back Better Act, which is inching closer to the finish line but remains on shaky ground with no room to spare in the Senate. Conspicuously, West Virginia Joe Manchin, the wildcard on the Build Back Better Act, has been highly critical of leasing ban on federal lands.
Curtailing fossil fuel supply on federal lands – or at least ending its growth – was within the power of the White House, but seems to have been sacrificed in favor of increasing the odds that Sen. Manchin gets on board with the Build Back Better Act.