Department of Interior proposes raising cost of drilling on public lands

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Oil and gas companies should pay more to drill on federal lands and waters, the Interior Department argued. report released on Friday, adding that the current rates were “outdated”.

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Running news: The Interior Department report noted that the federal government’s oil and gas leasing and permitting program “fails to provide taxpayers with a fair return, even before factoring in the resulting climate-related costs that taxpayers will face.” should be borne by him.”

  • The report found that the current program “falls short of serving the public interest” and “shorts up taxpayers and states.”

big picture: The report recommends raising the royalty rate to 12.5%, which is charged by the government to match the higher rates charged by private landowners and major oil and gas producing states.

  • The report noted that federal royalty rates did not increase for 100 years, and as a result, the federal government often charges less than companies paying states and private landowners.
  • According to the Interior Department, the Texas royalty rate, for example, can be twice the federal rate.

By numbers: The report does not propose a specific increase in the royalty rate, but charging a minimum of 18.75% for deepwater offshore drilling would increase by an additional $1 billion per year by 2050, Washington Post report,

Our Thought Bubble: The Black Friday release underscores how politically fragile the administration is on oil and gas policy, writes Nerdshala Ben Zemon.

  • Biden has campaigned on aggressive moves to limit federal land development as part of his broader climate agenda. But the administration also faces a political crisis from high petrol prices (though they are likely to fall as oil prices fall) and announced a major oil release from the Strategic Petroleum Reserve just days ago.
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Bottom-line: While the internal report supports a more restrictive approach to leasing, it falls far short of supporting a moratorium on selling oil and gas drilling rights on federal lands and waters, Geman notes.

  • This is likely to frustrate some activists who want more aggressive steps to curb the development of fossil fuels.


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