- The Biden administration announced the lowest number of offshore oil and gas lease sales in history, locking in less supply for the coming years and signaling higher prices for consumers.
- The 3 sales announced are the minimum required by law for Biden to conduct offshore wind lease sales, which he is aggressively pursuing despite the technology’s rising cost and whales washing up along beaches in the Northeast.
The Biden administration’s five-year plan for offshore oil and gas leasing will not include any sales in 2024 and will feature just three in the final four years–the lowest number of auctions in the history of the program. This continues his record as leasing fewer federal acres for oil and gas than any president since World War II. The lease plan, required by law, is a critical tool needed for domestic energy supplies and to keep gasoline prices in check. 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. The Biden lease plan is subject to a 60-day mandatory waiting period before it can be approved by Interior Secretary Deb Haaland. It will be 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 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. In July 2022, the Biden administration proposed an offshore lease plan that contemplated between zero and 11 lease sales. After cancellation and delays, the last lease sale scheduled since Biden took office based on the previous schedule is to be held by November 8 due to a court decision compelling the Administration to conduct the sale. According to federal officials, they will not begin the environmental planning work for new oil sales until after the five-year program is finalized. Even after that decision, individual oil sales could take months if not years to prepare, meaning Interior could have a significant lead time before the next oil sale is held.
The oil lease sales are being offered so that the offshore wind industry can continue to grow as it needs the IRA leasing mandates to be fulfilled. Under the IRA, every oil sale buys a year’s worth of offshore wind leasing. A delay in this fall’s offshore oil auction gives the Biden administration that much more time before it has to hold another sale and unleash more offshore wind leasing. Releasing a five-year oil lease plan gets the Biden administration a long runway for wind. Biden’s goal is to deploy 30 gigawatts of offshore wind by 2030. The administration has already approved four commercial-scale offshore wind projects and is expected to review at least 16 more offshore wind projects by 2025, although offshore wind is running into significant problems.
The Contents of Biden’s Offshore Lease Plan
Biden’s proposed plan includes up to three oil and gas lease sales in the Gulf of Mexico, the nation’s primary offshore source of oil and gas, in 2025, 2027 and 2029, but none in Alaska, which has more coastline than the rest of the United tates combined. According to the Interior Department, the government chose sections where oil and gas facilities already exist. The three lease sales are the minimum number the Biden administration could legally offer if it wants to continue expanding offshore wind development. Under the IRA, the government must offer at least 60 million acres of offshore oil and gas leases in any one-year period before it can offer offshore wind leases.
Two or more sales have been held most years over the past several decades under the federal offshore leasing program, which was established in the 1950s. While Biden’s plan means fewer sales, it will take years for that to impact oil production because companies can take up to 15 years to start drilling once a lease is won and awarded. Limiting leases does not have an immediate effect on prices because it takes years to produce oil after the purchase of an oil lease. But, the restrictions could have a major effect in the long term, and sends a message to markets about trending prices.
The five-year plan is significant because the government cannot conduct any lease sales that are not specified in the plan, and the time frame is such that it includes leasing actions that affect a future administration. The oil industry warned that limiting its opportunities to drill would lead to higher gas prices and force the country to increase oil imports from countries with lax environmental standards.
Democrat Senator Joe Manchin had attached the provisions to the IRA mandating reinstatement of four canceled offshore oil sales and the requirement that the administration allow future oil leasing on public lands and waters in order to continue leasing of renewable energy projects. Earlier this year, Manchin said he was incensed by the delay in the five-year plan’s release and the consideration of a no-new-leasing scenario. “This is not optional,” he said of offshore leasing under federal laws. “They are putting their radical climate agenda ahead of our nation’s energy security, and they are willing to go to great lengths to do it.” Manchin also promised to “hold their feet to the fire” if lease sales are not held.
Conclusion
The Biden administration just released a proposed offshore oil and gas lease plan that if approved will result in the lowest number of lease sales held in history. The only reason that the Biden administration included 3 oil lease sales in the Gulf of Mexico is that it is required by law to do so in order to continue the expansion of the offshore wind industry, which is having problems with quality control and rising costs. This restrictive offshore leasing program will reduce energy production, weaken America’s energy dominance, limit consumers’ access to affordable, reliable energy and compromise the nation’s ability to lead globally. Americans would be right to ask where they are expected to get the energy to run the U.S. economy since Biden’s plans show little promise of delivering.
