Joe Biden is nothing if not consistent. Biden doesn’t care about consumer energy costs as long as he’s proving to the world that he’s taking climate change seriously and is doing all he can to save our beloved planet.
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Reducing CO2 emissions may or may not reduce the amount of CO2 in the atmosphere. It’s logical that it would do so but it hasn’t been proven yet and won’t be proved until we destroy our economies trying to do it.. Even if the U.S. reduces emissions, there is absolutely no guarantee that everyone else will, especially China.
But perception in politics is more important than stuff like science. So Biden is advancing the “perception” that he’s saving us all from disaster.
Biden has decided that the royalty fees paid by producers for 100 years are too low. So in the midst of an increase in energy costs, Biden will raise the cost of getting oil out of the ground.
The Department of the Interior announced it has revised the Bureau of Land Management’s (BLM) oil and gas leasing regulations, which will raise royalty rates for the first time in 100 years and update the federal onshore oil and gas leasing framework. Under the new rule, the minimum royalty rate the government is paid will jump from 12.5% of revenue to 16.67%.
The move also increased the amount of the bonds that companies must secure before they start drilling tenfold – from a bond minimum of $10,000 set in 1960 to $150,000.
Several of the provisions in the rule were already codified by the Inflation Reduction Act, such as raising the rent the government charges to oil companies for using its land and increasing the government’s share of the profits from that oil.
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Drilling for oil is a crapshoot. Even with the most sophisticated scientific tools available, the chances of finding a commercially viable well are hard to calculate.
Before drilling, the operator must evaluate the economic case for a well, calculating the chances of finding commercial quantities of oil or gas, how quickly a discovery would pay back the investment and how much of a profit it would eventually make – in light of the prevailing oil price.
If the operator doesn’t find an economically viable well, they still have to pay for the privilege of drilling. Biden raising the price of royalties and other unnecessary cost increases are going to discourage drilling, especially in marginal fields.
The Department of the Interior said the rule will ensure a balanced approach to the development of the lands, provide a fair return to taxpayers and help steer oil and gas development away from important wildlife habitat and important cultural sites.
BLM will also preference land lease offers that are close to existing infrastructure or have a high potential for oil and gas production.
The administration seems proud of what they’ve done.
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“These are the most significant reforms to the federal oil and gas leasing program in decades, and they will cut wasteful speculation, increase returns for the public, and protect taxpayers from being saddled with the costs of environmental cleanups,” Interior Secretary Deb Haaland said.
“Wasteful speculation”? All speculation is “wasteful” until the operator hits pay dirt. Risk-taking is an essential part of the oil industry and Biden has just shut it down at the spigot.