In what is being labeled as “Onshore Oil and Gas Leasing Reforms” Secretary of the Interior Ken Salazar announced tougher new leasing rules that will inevitably make it more difficult and more expensive to drill for oil in the United States. Despite the recession, gas prices have crept up steadily in the past year – about a $1 increase per gallon from a year ago today. The national average is currently $2.68. Instead of increasing access to supply and creating jobs the administration is doing more to limit opportunities – or at least have it take longer to make use of those opportunities and make them more expensive. The Institute of Energy Research president Thomas J. Pyle weighs in:
“When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less. It’s a superlative not achieved by accident. Over the course of a single year, we’ve seen the Interior secretary block commonsense exploration through a number of creative means – from executing a pocket veto on a sensible plan to produce offshore, to outright rescinding existing lease contracts in Utah.
But while the means and methods have changed, the loser continues to be the American taxpayer. In 2008, the Interior Department collected 10-times the amount of revenue from lease sales than it did in 2009. Thanks to today’s announcement, that number has nowhere to go but down in 2010.”
The biggest loser is the American taxpayer and the American energy consumer, but the government is losing out, too, adds American Petroleum Institute president Jack Gerard:
“Since Salazar has taken his position, revenues from federal onshore oil and gas leasing in the five states that make up the Inter-Mountain West (Colorado, Montana, New Mexico, Utah and Wyoming) have plummeted over 80 percent, and the amount of total acreage leased by the government has shrunk to the lowest level on record. In Wyoming alone, nearly 70 percent fewer lease acres were issued by the federal government in 2009 than in 2008.”
Although the reforms aim to bring consistency and certainty, it will only reduce the incentive for companies to pursue projects that would increase jobs and the supply of energy without the help of the federal government. And it could be just the start. There are host of other things Congress and the Obama administration are doing to bring back higher energy prices. Senior Policy Analyst Ben Lieberman explains, and offers more prudent alternatives, in this paper.