The Department of the Interior released a long-awaited report on Friday, ordered by President Biden when he took office, on Friday, when he paused leases to oil and gas contracts on federal lands citing concerns about climate change.
The report called for raising royalty rates for the leases on public lands, but stopped short of recommending an end to them completely, as environmental activists have demanded.
A press release from the Interior said the report found significant shortcomings in the oil and gas leasing program and called for significant reforms to be made to ensure that the programs provide a fair return to taxpayers, discourage speculation, hold operators responsible for remediation, and more fully include communities and Tribal, state, and local governments in decision-making. Interior Secretary Deb Haaland said in a statement that our nation is facing a serious climate crisis that is impacting every American. The Interior Department has a duty to responsibly manage public lands and waters, providing a fair return to the taxpayer and mitigating the worsening climate impacts while staying steadfast in the pursuit of environmental justice. This review identifies important and urgent fiscal and programmatic reforms that will benefit the American people, outlines deficiencies in the federal oil and gas programs, and identifies significant deficiencies in the federal oil and gas programs. The report states that royalty rates on federal oil and gas leases have not been raised for 100 years, noting that states with leading oil and gas production apply royalty rates on State lands that are significantly higher than those assessed on Federal lands, and also that the royalty rate charged by Texas can be double the federal rate. A chart shows that royalty rates for federal oil and gas leases are typically around 12.5%, while Texas' rates are between 20 and 25%. The report says California, Montana, North Dakota, Utah and Wyoming are at 16.67%, while Oklahoma's rate is at 18.75% and Colorado's is at 20%.
The Interior wants a hike in bonding rates for companies that are involved in contracts, arguing that the levels have not been raised for 50 years.
The proposal to raise royalty rates on oil and gas companies comes as Biden faces enormous political heat over energy prices in the US, which has gone up more than 50% over the past year, and has been a major factor in soaring inflation in the nation that is hitting Americans in pocketbooks and hitting Biden's poll numbers.
Biden ordered the release of 50 million barrels of oil from the strategic petroleum reserve earlier this week in an effort to stop the bleeding on gas prices, a move criticized by Republicans who argue that Biden's policies have fueled the shortages, as well as shutting down pipelines and halting federal leases.
The Wall Street Journal reported that after the Interior Department's report, the American Petroleum Institute, the industry's top lobbying group, said the Biden administration is sending mixed signals by calling for initiatives to lower gas prices and releasing a report that would increase costs on American energy development. Climate change activists are furious over the report, saying the recommendations don't go far enough and slamming Biden for not keeping a campaign promise to end new oil and gas leases on federal lands.
As expected, Interior's oil and gas report is a complete climate failure, according to Taylor McKinnon of the Center for Biological Diversity. Its cowardly reform ideas presume more oil and gas leases that our climate can't afford. It abandons Biden's promise to end fossil fuel leasing and permitting. Before the report was released on Friday, McKinnon tweeted: A Friday-after- Thanksgiving news dump would signal skulking shame. Prepare for climate failure in the Interior Department's five-month late report on the oil and gas program review.