The Biden administration announced late Friday, on the eve of a holiday weekend, that it would open new federal lands to oil and gas leasing. If President Joe Biden was hoping to minimize blowback, he did not succeed. Environmentalists decried any new oil and gas extraction. The industry complained that Biden is still treating drillers too harshly. Both sides are wrong.
The Interior Department is opening 144,000 acres of public land to onshore oil and gas leases. This comes on top of the administration’s opening last year of 80 million acres offshore. At least two things have changed since Biden promised, as a presidential candidate, “No more drilling on federal lands, period.” A court ordered the administration to open Gulf of Mexico waters to additional drilling. Then Russia’s war in Ukraine pushed up gasoline prices as inflation was already rising. Biden, whose party is facing a restive electorate in a year when control of both houses of Congress are on the line, wants to assure voters that he is doing what he can to respond.
The industry is displeased that the administration did not open up more land and that the new policy hikes the royalty rates companies must pay to drill on public property from 12.5% of their profits to 18.75%. But the Government Accountability Office concluded in 2017 that doing so would have small, if any, effects on the amount of oil and gas produced on federal land, while bringing in substantial new revenue. This dovetails with other analyses finding that the government has been undercharging drillers.
Environmentalists, meanwhile, say that new leasing on public land contradicts Biden’s promises to protect the environment. Yet the administration points out that it is only opening a fraction of the acreage oil and gas companies wanted, focusing on plots abutting existing development. The higher royalty rate, meanwhile, better reflects the environmental costs of fossil fuel production.
The world will kick fossil fuels only when the economy no longer demands them. Even under an ambitious emissions-cutting program, that would take a very long time. The United States should not continue to consume enormous amounts of oil while offshoring the risk of producing it. Many other oil-producing countries lack the regulations and safeguards drillers must meet in this one. Declining to tap U.S. resources would also deprive the U.S. government of royalty revenue and American workers of jobs.
The best way to cut demand for dirty energy is to put a hefty charge on polluting fuels that reflects the damage they do to the human habitat. A second-best approach — the one that Biden is pursuing with congressional Democrats — is to make cleaner fuel cheaper, green goods such as electric cars more plentiful and the economy more efficient, using government subsidies and spending programs. A plan reflecting this latter strategy still has a chance of passing Congress this year.
Even if it does, the United States will require lots of oil for a very long time, and the government should seek to keep the market stable and predictable. Careful oil and gas production on federal lands can and should be a part of that.