Former heavyweight boxing champion Mike Tyson famously said, “Everybody has a plan until they get hit in the mouth.”
This, of course, applies to the Biden administration and its plan to terminate oil and gas leases on federal land.
Driven by climate activists, Biden hoped to stop leasing new federal areas to oil and gas companies for exploration and development. But it has been hit hard by politics and market realities, including the recent rise in oil prices to $ 75 a barrel. The
Team Biden recently suffered a major failure in federal court. After Louisiana and 12 other states challenged the measure, the court prevented it from suspending oil and gas leases on public lands and waters.
Now there is news that despite the government’s bold commitment to reducing carbon emissions and fighting climate change, the government has been approving federal drilling applications at a record pace in recent months. According to the Associated Press,
Biden has approved approximately 2,100 drilling applications since taking office, with New Mexico and Wyoming leading the way in approvals. This is the highest level since the former Republican oilman George W. Bush assumed the presidency.
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Interior Ministry officials may be processing Trumpera’s pending permit applications, but this does not explain such a large number . Management is more likely to see barriers in the energy market.
West Texas Intermediate Crude Oil (WTI) The price of
benchmark crude oil has risen to nearly US$75 per barrel. Since Biden took office in January, the average US gasoline price has risen by 30% to around US$3.15 per gallon. The price of the pump has risen by nearly $1 per gallon over the previous year.
Two oil pumps in Cushing, Oklahoma. (Photo by Johannes Eisler/AFP) (Photo by Johannes… [+] AFP VIA GETTY IMAGES
Government officials are increasingly concerned about rising energy prices, which could slow the economic recovery from the Covid19 pandemic. Recently, they have held several high-level dialogues with OPEC + member states, including Saudi Arabia and the United Arab Emirates, to encourage the cartels to add more supplies to the market and remove some of the heat in the oil market.
It is unclear whether this pressure will help Saudi Arabia and the United Arab Emirates reach a compromise last week, which should allow OPEC + producers to gradually add 2 million barrels of additional supply to the market by the end of the year. . But this shows that despite Biden’s aggressive climate agenda, he has gone no further than pressuring OPEC to cool down high oil prices, like all presidents since the establishment of the cartel in 1960.
In fact, the Internal affairs officials often try to reassure lawmakers by saying that the West declared that despite the freeze on new lease auctions at the beginning of Biden’s term, the Biden administration will continue to issue permits. This will not please climate activists and progressives, but it does mean understanding the importance of the oil and gas industry to the US economy.
It will be interesting to see where things go from here. Management is conducting a comprehensive review of the federal lease plan. A report from the Ministry of the Interior is expected to set the tone for any future oil and gas leases provided by the government.
In view of rising oil prices and tight oil markets, not to mention the legal uncertainty surrounding the federal lease ban, it is wise to withdraw the policy.
Offshore drilling affected by Biden’s lease ban
Offshore service industry support vessel Hornbeck HOS Clearview docked in Fulchion, Louisiana, ... [+] © 2021 BLOOMBERG FINANCE LP
Energy lobbyists want us to the government does this Yes, but there are certain regulations. These can include stricter methane controls, stricter financial guarantee requirements, and even higher royalties. However, Biden cannot be excessive in royalties, because American oil and gas projects must compete with opportunities in other parts of the world.
The reason the United States can become the top three producing countries in the world is due to its competitive exploration and development tax environment. Since the 1920s, the royalty rate for land leases has remained at 12.5%, despite repeated efforts to increase it over the years. The offshore rate for shallow water operations remains at 12.5% and the offshore rate for deep water operations is 18.75%.
Compared to opportunities in other producing regions such as Russia and the Middle East, raising these excessively high interest rates can result in excessively high costs for US projects, effectively amounting to a ban on leasing. This may be tempting for the government, but most other major producing regions are not as concerned about climate change as the United States.
In fact, deepwater projects in the Gulf of Mexico are less carbon intensive than one of the countries where the United States now imports oil: Saudi Arabia.
The government is not difficult to understand, but it explained to the Autonomous Climate Foundation to help Biden choose another story.