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 report released on Friday, adding that the current rates were “outdated”.
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.
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.