Key Takeaways
President Joe Biden has decided to have the fewest offshore oil and gas leases in history as he will only hold 3 over 5 years—far fewer than the 47 sales proposed by President Trump.
The three lease sales are the fewest possible under the Inflation Reduction Act, in which Congress insisted upon oil and gas lease sales if the Administration held offshore wind sales.
Under the plan, no sales will be held until 2025, and no sales will occur off the east and west coasts or offshore Alaska.
The lease sale plan was finalized after Biden removed 235 million barrels of oil from the Strategic Petroleum Reserve, making the United States less secure as the world political situation looks increasingly sketchy, especially in the oil-exporting Middle East.
President Biden’s Interior Department announced its final drilling plan for offshore oil and gas leasing over the next five years on December 15, holding only three lease sales between 2024 and 2029—the fewest since the program began. And it is only holding those 3 lease sales because the federal government is required to lease at least 60 million acres for oil and gas exploration as a condition of issuing offshore wind power leases under the provisions of the Inflation Reduction Act—provisions that Senator Manchin demanded. The final plan sets a lease sale in the Outer Continental Shelf (OCS) for 2025, a second in 2027 and a third in 2029. The plan calls for no lease sales in 2024. It also rules out any leasing off the Alaskan coast, and in the Atlantic and Pacific Oceans, in another departure from previous plans.
Biden’s five-year offshore oil and gas lease plan is a threat to national security as it will increase reliance on foreign energy sources. The geopolitical situation in the Middle East is already reducing the availability of oil as BP has temporarily paused all transits through the Red Sea because of increased attacks on commercial vessels by Houthi militants from Yemen. BP’s decision follows similar actions by major shipping firms, which could ripple through global supply chains and increase the costs of moving goods. BP’s announcement raised oil prices for Brent and U.S. oil by almost 3 percent. It also affected the natural gas market with Europe’s benchmark prices rising 7.7 percent to above €35.75 ($39.04) per megawatt hour.
Further affecting national security, Biden has removed 235 million barrels of oil from the Strategic Petroleum Reserve (SPR) and is citing all sorts of problems in refilling it, including the price of oil, the quality of oil in the bids, maintenance needed on the reserve facilities, and lack of funds for its modernization program. Biden sold the oil from the reserve on average for about $20 more than the current oil price, yet he lacks funds for SPR maintenance and buying oil to refill it. The oil Biden sold was bought for an average of $30 a barrel so the government made around $65 a barrel on it. Now the SPR is only half full; its levels are at a 40-year low. The Biden administration is hurting the national security of the United States in many ways in its attempt to rid the United States of fossil fuels. Even Elon Musk, founder of Tesla, said oil and gas should not be demonized in the medium-term.
America’s oil is among the lowest carbon-intensive barrels in the world. Using Yale University’s Performance Index (EPI), the U.S. EPI score is 51.1, which compares to the average EPI score of 39 for the 20 largest oil-producing countries outside the United States. That means the average barrel of non-U.S. petroleum is produced in a country with an environmental score that is 23.6 percent lower than that of the United States. The United States, the world’s largest producer of both oil and natural gas, is only outranked on environmental quality by 3 of the top 20 oil producers—countries that produce less than one-quarter of the volumes of oil that the United States produces. The countries scoring higher on environmental quality produce just 35.7 percent of U.S. oil production. The magnitude of U.S. oil production combined with its excellent environmental standards means that U.S. production disproportionately reduces the environmental harms of oil production on a global scale. U.S. oil is therefore better for the environment than most other oil.
Background
The Interior Department is required by law to create a national oil and gas leasing schedule every five years. It has been without one since the previous plan, developed by the Obama administration, expired in June 2022 as Biden rejected President Trump’s “America-First” OCS leasing program early in his presidency. In July 2022, the Biden administration proposed an offshore lease plan that contemplated between zero and 11 lease sales. That plan is now finalized at just the 3 sales mandated by the Inflation Reduction Act. The persistent delay in issuing a final replacement plan represents a huge departure from precedent set by both Republican and Democratic administrations, which have historically finalized replacements immediately after previous plans expired. The plan is the 10th offshore oil program since 1978, when the Outer Continental Shelf Lands Act was amended to include a program for drilling in federal waters.
The plan continues Biden’s record as leasing fewer federal acres for oil and gas than any president since World War II. Since 1992, no five-year oil lease plan has had fewer than 11 lease sales and most have had 15 to 20, according to the Interior Department’s Bureau of Ocean Energy Management. In 2018, the Trump administration’s proposed plan had 47 lease sales and besides the Gulf of Mexico and Alaska, included offshore areas in California and the Atlantic. Court decisions have required continued leasing and the Inflation Reduction Act (IRA) has made offshore oil lease sales a pre-requisite for new offshore wind lease auctions that are a major part of Biden’s climate agenda.
Conclusion
The Biden administration continues its war on oil and gas with its offshore oil and gas lease plan for the next five years finalized on December 15 with no lease sales in 2024 and just 3 sales in the remaining period. The only reason that the administration did include 3 offshore sales for oil and gas is that the Inflation Reduction Act (IRA) requires them in order to have offshore wind lease auctions, which Biden needs to reach his climate goals. Biden’s war on oil and gas will hurt national security and raise prices for Americans, including gasoline prices.
According to Democratic Senator Joe Manchin, “It’s now clear without a shadow of a doubt that without the IRA, this Administration would have ended federal oil and gas development completely.” He continued, “But instead of embracing the all-of-the-above energy bill that was signed into law, this Administration has once again decided to put their radical political agenda over American energy security, and the American people will pay the price.” “Granting the bare minimum of oil and gas leases will result in a minimum of renewables leases as well because the IRA tied the two together. You can’t have one without the other.”
