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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Biden Faces Off With Big Oil Over Drilling Auctions

The ongoing situation for 2021 in the U.S. appears to be Big Oil versus Biden, as once again major U.S. oil industry groups are suing President Biden for halting drilling auctions on federal lands this year. 

This has been a long-standing issue since President Biden’s inauguration, with Republican states and Big Oil fighting for their right to continue with new leases while oil and gas demand remain high, as Biden responds to the green policy promises from his election campaign. 

During the national election, Biden assured environmentalist voters that he would not be issuing new leases to oil and gas companies as part of his aim to make the U.S. carbon neutral and improve national efforts to halt climate change. 

In January, the newly elected president paused drilling auctions in order to review the environmental impact and value to taxpayers. However, the evaluation, which was expected to be completed by now, remains ongoing causing backlash from oil firms across the country. 

The plaintiff group, consisting of The American Petroleum Institute (API) and 11 others, which sued President Biden’s government in the federal court of western Louisiana on Monday, reasoned that the government is required by law to hold regular sales. The group also believes the pause has led to greater unemployment and a decrease in revenue. 

Chief Legal Officer of API Paul Afonso stated of the situation, "The law is clear: the department must hold lease sales and provide a justification for significant policy changes." Further, "They have yet to meet these requirements in the eight months since instituting a federal leasing pause, which continues to create uncertainty for U.S. natural gas and oil producers."

Related: Where Does Wall Street Think Oil Is Heading? Alfonso also highlighted the willingness for Big Oil to support low-carbon goals going forward. “As our industry takes action to preserve our legal rights, we will continue working with the Biden administration on policies that support a lower-carbon future while providing access to the affordable, reliable energy our economy needs to recover,” he explained. 

But this is not Biden’s first call to court since the January pause. In June, a federal judge agreed upon a nationwide injunction in opposition to the memorandum while another lawsuit from several Republican-led states is ongoing. The latest legal action came about when Biden did not respond to the June order by recommencing lease sales. One lease in question is about a 78-million-acre area offshore of the Gulf of Mexico. 

However, members of the Biden administration have supported the President, assuring the plaintiffs that they are complying with the federal court order but cannot resume leases as quickly as desired due to the complex nature of resuming lease sales. 

By as early as March this year, leases in the Gulf of Mexico, the Cook Inlet of Alaska, and projects in Wyoming, Utah, Colorado, Montana, Oklahoma, Nevada and New Mexico had all been cancelled. This led thirteen Republican-leaning states to sue the current administration. 

While Biden maintains his stance on the pausing of leases until the evaluation is complete, assuring his voters that climate change and the curbing of fossil fuel production is at the top of his political agenda, he has recently been slammed for appealing to OPEC+ to boost oil production in the coming months. 

Last Wednesday, Biden called upon Saudi Arabia and other OPEC member states to consider the importance of “affordable energy”.  He suggested that the price of U.S. gasoline had already climbed too high and the international demand for energy was continuing to rise, driving oil prices up. 

This comes just days after the release of a landmark U.N. report on climate change, and a few months after a similar report from the IEA, encouraging the developed world to move away from fossil fuels and introduce more renewable energy projects as major international players strive for net-zero carbon emissions over the next 30 years. 

Related: U.S. Rig Count Rises To 16-Month High

Kassie Siegel, director of the Center for Biological Diversity’s Climate Law Institute, stated, “This US statement is horrifying, and we won’t stand for it. We’ll hold Biden accountable to his promises to lead on climate. There is no way to address the climate emergency without limiting oil production. They are one and the same.” 

At the same time, Biden is being criticised by Republican oil supporters for continuing to support oil production in other parts of the world. “The White House doubles down on favoring OPEC production while giving the middle finger to American energy jobs, American energy consumers, climate advantaged American production,” stated Scott Angelle, former lieutenant governor of Louisiana.

This week, OPEC+ predictably denied President Biden’s request to increase production levels. While OPEC+ currently intends to produce an additional 400,000 bpd of oil every month over the next year, the group of oil-rich states was never likely to ease U.S. inflation to the detriment of their own economies. 

This leaves President Biden’s reputation tarnished. While the Republican Party and Big Oil accuse Biden of disowning North American oil, a sentiment shared by his Canadian neighbours, environmentalists and many of his supporters criticise his backtracking on climate change policies in the face of increased oil demand. 

As Biden responds to the ongoing need for fossil fuels to keep the country running, who will rein champion in the fight between climate change warriors and Big Oil? With North American oil producers pushing for greater momentum while demand is high, and OPEC+ looking unlikely to shift on their quotas, it seems that Biden may have to balance his green policy aspirations with the expectations of a U.S. public-facing both rising inflation and increasing energy prices. 

By Felicity Bradstock for Oilprice.com

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