Interior calls for rate hike for oil and gas companies to drill on federal lands

The Home Office on Friday released a long-awaited report ordered by President Biden when he took office, when he suspended leases of oil and gas contracts on federal lands, citing concerns about climate change.

The report called for increasing royalty rates for such leases on public land, but did not recommend ending them altogether as demanded by environmental activists.

An Home Office press release said the report revealed “significant gaps in the oil and gas leasing program,” and called for “significant reforms that should be made to ensure the programs deliver a fair return. to taxpayers, discourage speculation, hold operators accountable for remediation, and more fully include tribal, state and local communities and governments in decision-making. “

Representative Deb Haaland, DN.M., speaks during a Senate Energy and Natural Resources Committee hearing on her appointment as Home Secretary, Tuesday, February 23, 2021 at Capitol Hill in Washington. (Graeme Jennings / Pool via AP) (AP / AP Newsroom)


“Our nation is facing a deep climate crisis that affects all Americans,” Home Secretary Deb Haaland said in a statement. “The Home Office has an obligation to responsibly manage our public lands and waters – providing a fair return to the taxpayer and mitigating worsening climate impacts – while remaining steadfast in the pursuit of justice environmental. “

Haaland added, “This review highlights significant gaps in federal oil and gas programs and identifies important and urgent budgetary and programmatic reforms that will benefit the American people. “

The report itself says that royalty rates on federal oil and gas leases “have not been increased for 100 years,” noting that “the most oil and gas-producing states apply royalty rates on state lands that are considerably higher than those assessed on federal lands “and adding that the royalty rate charged by Texas, for example,” may be double the federal rate. “

biden oil

View of the pumping cylinder in the oil well of the oilfield. The arrangement is commonly used for low oil producing onshore wells. Pumpjacks are common in oil-rich areas. (AP / iStock / AP Images)


An included chart showed that royalty rates for federal oil and gas leases are typically around 12.5%, while rates for Texas are between 20 and 25%. For comparison, the rates for California, Montana, North Dakota, Utah, and Wyoming are 16.67%, while the rate for Oklahoma is 18.75% and the rate for Oklahoma is 18.75%. Colorado by 20%, according to the report.

The Interior also wants an increase in bond rates for companies engaged in the contracts, arguing that the levels have not been raised for 50 years.

But the proposal to raise royalty rates on oil and gas companies comes as Biden already faces enormous political pressure on energy prices in the United States, which have soared more than 50% over the course of the year. last year and played an important role in the surge in inflation in the country. it hits Americans in their wallets – and hits Biden’s poll numbers.

Earlier this week, Biden ordered the release of 50 million barrels of oil from the Strategic Petroleum Reserve in a bid to stop the bleeding from soaring gas prices, a move criticized by Republicans who point out that the United States became energy independent under former President Trump – and argues that Biden’s policies such as shutting down pipelines and halting federal leases have fueled the shortages.

Biden gas prices

Gas prices have climbed 50% nationwide in the past year (Getty Images)

The Wall Street Journal reported that following the Home Office report, “The American Petroleum Institute, the industry’s leading lobbying group, said the Biden administration was sending mixed signals by calling both to initiatives to reduce gas prices and to publish a report that would increase costs on US energy development.

Meanwhile, climate change activists are furious at the report, saying the recommendations don’t go far enough and criticize Biden for failing to deliver on his campaign pledge to end new oil and gas leases on federal lands entirely. .


“As expected, Interior’s oil and gas report is a complete climate failure,” tweeted Taylor McKinnon of the environmental group Center for Biological Diversity. “His cowardly reform ideas involve more oil and gas leases than our climate can afford. He abandons Biden’s promise to end new fossil fuel leases and permits.”

Ahead of the report’s release on Friday, McKinnon tweeted: “A news dump Friday after Thanksgiving would signal a stealthy shame. Prepare for climate failure in the Home Office report five months behind schedule. review of the oil and gas program. “

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