Federal Leases for Oil Drilling Fall Dramatically Under Biden

By Bryan Jung
Bryan Jung
Bryan Jung
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.
September 6, 2022 Updated: September 6, 2022

The Biden administration has issued the lowest amount of federal leases to drill for oil and gas than any other administration since the end of World War Two, according to an article in the The Wall Street Journal, on Sept. 4.

The drop in permits to drill offshore or on federal lands has been noticeable, with leasing down 97 percent from the first 19 months of the Trump administration.

The federal leasing program was underutilized when energy companies were primarily focused on fracking on state and private lands during the shale boom, when energy was cheaper.

According to the WSJ, data from the Bureau of Land Management and Bureau of Ocean Energy Management demonstrated a slowdown in onshore and offshore leasing since Biden took office.

Out of the roughly 35 million acres currently leased from the federal government, about 60 percent were not actively producing oil or gas, according to the data.

The U.S Department of the Interior, despite claiming that it had issued a record-high numbers of leases under the Biden administration, had only leased 126,228 acres for drilling through Aug. 20, according to the WSJ.

Federal leases account for more than a quarter of all domestic oil production.

The article noted that the last president to lease out fewer than 4.4 million acres in the first half of his term was former President Richard Nixon.

Only former President Harry Truman leased fewer acres than the current administration, at 65,658 acres, from 1945 to 1946

Leasing Federal Lands

However, offshore drilling was in its infancy and the federal government was not yet involved in leasing water rights, which now make up the bulk of oil and gas leases, according to the WSJ.

President Biden, in a January 2021 executive order, suspended all new leasing of federal lands for drilling, “pending completion of a study and reconsideration of oil and gas permitting and leasing practices.”

He pledged during his 2020 presidential campaign that he would restrict oil and gas production on federal territory as part of a Green New Deal agenda that would transition the U.S. economy to “clean” energy.

“No more drilling on federal lands, no more drilling including offshore—no ability for the oil industry to continue to drill—period,” said Biden during the campaign, a promise which he has tried to keep.

He immediately imposed an indefinite moratorium on new leases in his first week in office, while his administration required additional reviews of all drilling permits for the first two months of his term.

Gas prices gradually started to climb in 2021, soon after Biden slashed domestic energy production, which only worsened when Russia invaded Ukraine in late February 2022.

That had led gas prices to surge to more than $5 per gallon in June and July, as massive energy shortages affected economies worldwide.

Significant public pressure was put on the White House to soften its anti-fossil fuel stance and to boost U.S. oil supplies as inflation began to soar.

The administration finally allowed the onshore leasing program to restart on April 15, but with higher permit fees for oil companies.

Biden has primarily relied on tapping the Strategic Petroleum Reserve to lower U.S. energy prices, which is now at its lowest level in almost 40 years.

“Energy development on federal lands and waters account for approximately 24 percent of oil production and 11 percent of natural gas production,” said Rep. Bruce Westerman (R-Ark.).

“Banning energy production on federal lands and waters would only make the United States more dependent on overseas suppliers like OPEC and Russia and drive up prices in the long term. As a result, Americans will continue to pay the price for these anti-energy policies at the pump.”

Biden is the first president to deliberately avoid utilizing the decades-old leasing program, which has been the primary way for previous administrations to raise domestic energy production.

The Mineral Leasing Act of 1920, for example, requires that the government permit onshore oil and gas leasing “at least quarterly.”

Despite being in office for six consecutive quarters, Biden has only held one auction, which took place in June 2022, after anger erupted over gas prices.

In comparison, the Carter and Reagan administrations accelerated leasing to record highs in the 1970s and early 1980s in response to the oil crisis, with Reagan leasing nearly 48 million acres in his first 19 months in office.

The Interior Department Steps In

Biden’s Interior Department has only awarded 203 leases for oil and gas development during the same period, while former presidents Trump and Obama both approved 10 times as many leases, according to the WSJ.

When Biden was vice president in 2009, the Barack Obama administration held 35 onshore oil and gas lease sales in the first year, but the current administration has held none.

The administration failed to complete its only offshore sale back in November 2021, when the 80 million-acre deal was invalidated by a U.S. District Court judge back in January.

The judged halted the sale after 1.7 million acres were sold off, once ruling that the administration had failed to do a proper environmental analysis.

The White House declined to appeal the decision and quietly let the sale drop.

Meanwhile, 13 states filed an injunction on June 15, 2021, at a U.S. district court in Louisiana, to block the pause on leasing by the Interior Department, arguing that their state economies would suffer injury from the anti-drilling policy.

A federal judge in Louisiana recently ruled after the original decision was bounced back by a federal appeals court, and that the president’s moratorium was unlawful.

Anger toward the Democrats in the House and the Senate has been rising over the Democrats’ handling of the economy right before the midterms.

Sen. Joe Manchin (D-W. Va.), for example, in a compromise among his fellow Democrats, pushed for a provision in the Inflation Reduction Act, which provides new drilling opportunities on federally leased land; but progressives are pushing back against it, as it contradicts the party’s official green energy agenda.

The threat to block a government funding bill over the inclusion of the provision for federal leasing is complicating matters for the Democrat leadership, as it is holding up plans for the federal budget at the end of the year.

The addition to the spending bill requires the government to hold periodic sales of oil and gas leases of at least 60 million acres of offshore parcels and 2 million acres on federal land every year for the next decade.

It also mandates that several lease sales must be held by the Interior Department over the next year in the Gulf of Mexico and Alaska, including one by the end of 2022.

This includes the reinstatement of two canceled leases worth $192 million in the Gulf of Mexico, which were blocked by a court decision in Washington, D.C., along with one in Alaska, both before October 2023.

House Natural Resources Chairman Raúl Grijalva (D-Ariz.) circulated a letter requesting that the Democrat leadership separate Manchin’s provision from the spending bill to temporarily avert a government shutdown caused by objections to federal leasing.

“Don’t attach it to a budget, to a continuing resolution, must-pass legislation and therefore take this essential Republican agenda and have Democrats pass it,” said Grijalva to The Hill in August.

Energy analysts have said that the decline in federal leasing has not been a prime factor in the rise in energy prices at this moment, as oil typically takes years to reach the market after federal leases are approved.

However, the slowdown of further drilling leases this year will have a long-term effect, by causing oil and gas production to decline in 2032, according to the WSJ.

Oil prices rose to $88.32 a barrel on Sept. 2, following days of losses, as OPEC leaders discuss a cut in output at its meeting next week and due to a plan by the G-7 nations to cap Russian oil prices.

Bryan Jung
Bryan S. Jung is a native and resident of New York City with a background in politics and the legal industry. He graduated from Binghamton University.