Posted on: 06. 30. 22
Earlier this year, we reported that the Biden Administration planned to go back on its original ban on leasing federal land for oil and gas drilling.
While our industry was thrilled at the prospect of locally sourced resources and the potential for decreased prices at the pump. Later actions from the administration displayed back-and-forth dedication to its initial promise with the result being a rocky start to initial auctions on Wednesday, June 29, 2022.
Let’s take a look at what’s going wrong with the process, why, and what other issues could be preventing the Biden Administration from building back better in one of the nation’s most essential industries.
Administration Tests for Demand Aren’t Looking Great
Wednesday served as the big kick-off for the Biden administration’s auction for oil and gas land in eight states.
Unfortunately, the welcome from the oil and gas industry wasn’t as warm as the administration would have liked.
According to an article from Reuters, the sales that will go through Thursday, June 30th, was a test for the industry’s demand for federal acreage and domestic output.
While most would expect initial bids to be high and competitive, this wasn’t the case on the first day of the auction.
Why Would the Oil and Gas Industry Reject Potential Opportunities?
The first day of auctions had 120,000 acres of land in Wyoming on the table, and more than a third of the parcels received zero bids from industry leaders.
Although locally sourced oil and gas has the potential to reduce consumer gas prices, industry groups say that there are numerous reasons behind the rejection of offered land.
The main two issues are:
- The higher royalties that the administration would place on production; essentially forced gas prices to remain at high levels
- The administration’s rigorous attempts to halt new leasing amidst a current crisis that stems from sanctions after Russia’s invasion of Ukraine
Biden Administration Opens the Door to Environmental Lawsuits
The President’s big bids don’t just have members of our industry upset but have also attracted two lawsuits from national environmentalists. According to an article from The Hill, a coalition of environmental groups sued President Biden and the Biden Administration on Wednesday when it approved the federal leases it granted our industry.
Despite oil and gas’s efforts to drill and produce with greener efforts, the plaintiffs of the lawsuit claim that the sales will result in billions of dollars in harm to air, local wildlife, people’s health, and water sources.
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