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Is The U.S. Government About To Make Oil Drilling More Expensive?

The Department of the Interior has proposed higher royalty rates and other fees for oil and gas drillers on federal lands as well as limits on the land where they are allowed to drill, after a review of current procedures.

After it said the current mechanism "falls short of serving the public interest," the Interior Department proposed that the minimum royalty rate of 12.5 percent—which, according to Reuters, has not been changed in over 100 years—is hiked along with other fees drillers have to pay the government.

In addition to higher fees, the department also proposed limits on the federal lands open to drillers to avoid leasing "that conflicts with recreation, wildlife habitat, conservation, and historical and cultural resources."

"Our nation faces a profound climate crisis that is impacting every American. The Interior Department has an obligation to responsibly manage our public lands and waters – providing a fair return to the taxpayer and mitigating worsening climate impacts – while staying steadfast in the pursuit of environmental justice," said Interior Secretary Deb Haaland.

"This review outlines significant deficiencies in the federal oil and gas programs, and identifies important and urgent fiscal and programmatic reforms that will benefit the American people," she added.

Related: Aramco And Reliance Industries Scrap $15 Billion Refinery Deal

Reuters reported that the industry was not happy with the proposals, noting they would add to the financial burden of oil and gas drillers at a time when retail fuel prices are already high.

Environmentalists are also unhappy with the proposed changes as they seem to feel they are not sufficiently prohibitive for the oil industry.

"These trivial changes are nearly meaningless in the midst of this climate emergency, and they break Biden's campaign promise to stop new oil and gas leasing on public lands," a senior official of the Center for Biological Diversity told Reuters.

"Greenlighting more fossil fuel extraction, then pretending it's OK by nudging up royalty rates, is like rearranging deck chairs on the Titanic," Randi Spivak said.

By Charles Kennedy for Oilprice.com

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  • Bob BARKER on November 29 2021 said:
    If the Biden administration is trying to lower the price of gasoline, then why do they keep proposing policies that do the opposite? Also, instead of begging OPEC to increase output, why not work with US oil producers?

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