More than a year after the Obama administration’s Outer Continental Shelf five-year offshore leasing program expired, the United States still does not have a new plan in place, as required by law. As put plainly by the Chair of the House Subcommittee on Energy and Mineral Resources Pete Stauber (R-MN) during a House Natural Resources Committee hearing this week:
“By ignoring federal law for the first time in history, this administration has threatened economic prosperity and energy security.”
As stipulated by the Outer Continental Shelf Lands Act (OCSLA), the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) is tasked with the preparation and maintenance of a schedule of regular lease sales under the offshore oil and natural gas leasing program. The most recent five-year program expired on July 1, 2022, and as of July 2023, there is still no new plan in place. Chairman of the Senate Energy and Natural Resources Committee Joe Manchin (D-WV) denounced this delay in a March statement, admonishing:
“[the Biden administration is] putting their radical climate agenda ahead of our nation’s energy security.”
Stalling Limits Domestic Production
Stalling the offshore oil and natural gas leasing process has far-reaching, real-world consequences. With federal offshore oil production from the Gulf of Mexico (GOM) accounting for 15 percent of total U.S. crude oil production, halting new lease sales on the outer continental shelf has long-term impacts on domestic supply and export capacity.
Halting production on federal lands and waters does not mean that less oil and natural gas will be produced and consumed globally; instead, restricting domestic production leads to greater reliance on foreign sources of energy, most of which have looser safety and environmental standards. According to a study on global oil production from global advisory firm ICF:
“The U.S. Gulf of Mexico has a carbon intensity 46 percent lower than the global average outside of the U.S. and Canada, outperforming other nations like Russia, China, Brazil, Iran, Iraq, and Nigeria.”
A delayed five-year leasing plan hampers renewable energy development as well. The Inflation Reduction Act mandates that BOEM must offer a minimum of 60 million acres for offshore oil and gas leasing in a given year before offshore wind leases are offered. Since environmental reviews for leases currently take up to two years, this means there may be no new lease sales executed in 2024 or 2025 – and consequently, there could no new offshore wind lease sales completed until 2025 or 2026.
More Mixed Messages
The Biden administration is not only stalling on the five-year plan – it is quietly settling with activist groups to exclude large amounts of GOM territory from future leases. In late July, the administration entered into a court settlement with a coalition of environmental groups led by the Sierra Club. As Fox News explains:
“The [Biden] administration agreed to exclude about 11 million acres with rich oil resources in the Gulf of Mexico from future lease sales. That acreage would likely have been available for future lease sales mandated under the Inflation Reduction Act.”
Taken together, the Biden administration’s settlement agreement and BOEM’s reluctance to move ahead with a new five-year leasing plan have the potential to hold back a significant volume of oil from the market, with effects lingering long into the future. According to a joint report from the American Petroleum Institute (API) and the National Ocean Industries Association (NOIA):
“With a 5-year offshore leasing program, the Gulf of Mexico is projected to produce an average of 2.6 million barrels per day of oil and natural gas from 2022 – 2040. A delay in the program could mean nearly 500,000 barrels per day less over that time period.” (emphasis added)
Just this week, gasoline prices across the country saw their largest one-day spike since July 2022, driven in part by OPEC+ production cuts. Renewed oil price volatility as the country nears election season prompted Energy Secretary Granholm to call for more domestic production to alleviate tight supplies.
“We want to see more supply. . . I think the prudent course is to ensure that transportation is affordable for people, and that of course means making sure that supply is stable.”
Nearly two years into President Biden’s tenure, the White House continues to call for increased domestic production while pursuing policies that have the opposite effect. In 2022, President Biden made unsuccessful pleas to OPEC+ to increase oil production in order to reduce political pressures arising from high gas prices. This time around, let’s rely on production here at home.
Bottom Line: The American people deserve more than mixed messages. The Biden administration needs to put out a five-year offshore leasing plan that schedules prudent and legally-mandated oil and natural gas lease sales. The longer the draft plan stalls, the greater the damage on American economic and energy security.
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