Oil industry and Biden administration clash over latest proposals

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  • Joe Biden
    Joe Biden
    46th and current president of the United States

New proposals by the Biden administration and Congress could have a major impact on the mainstay of Louisiana and Houma-Thibodaux's economies: oil and gas.

Biden and the oil industry have long been at odds as he follows through on a campaign pledge to reduce the pollution, rising seas and other ill effects greenhouse gasses from fossil fuels are wreaking on the planet.

His latest action came Friday when the Interior Department proposed major changes to the federal government's oil and gas leasing program. The report includes a recommendation to increase royalty rates, or the price the government charges oil and gas companies to drill on federal lands and waters, including the Gulf of Mexico.

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“Our nation faces a profound climate crisis that is impacting every American. The Interior Department has an obligation to responsibly manage our public lands and waters – providing a fair return to the taxpayer and mitigating worsening climate impacts – while staying steadfast in the pursuit of environmental justice,” Interior Secretary Deb Haaland said in releasing the report. “This review outlines significant deficiencies in the federal oil and gas programs and identifies important and urgent fiscal and programmatic reforms that will benefit the American people.”

Oil-industry groups expressed immediate opposition.

"During one of the busiest travel weeks of the year, when rising costs of energy are even more apparent to Americans, the Biden administration is sending mixed signals," Frank Macchiarola, senior vice president with the American Petroleum Institute, said in a news release. "Days after a public speech in which the White House said the president 'is using every tool available to him to work to lower prices and address the lack of supply,' his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing."

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Meanwhile, the Biden-backed Build Back Better legislation passed Nov. 19 by the House includes several provisions that would also limit drilling and make it more difficult and expensive to explore for and produce oil and gas. Among its provisions:

  • A permanent ban on drilling off most of the nation's coasts, including the eastern Gulf of Mexico. Congress has repeatedly enacted bans in that area, with the latest set to expire in June. The Trump administration issued an executive order extending the ban through 2032, but that could be undone by any president without congressional action.

  • A fee on methane released from wells, pipelines and oil and gas storage sites.

  • About $300 in combined tax credits aimed at encouraging the use of renewable energy instead of fossil fuels to produce electricity, power vehicles and manufacture goods.

  • Tax credits of up to $12,500 on the purchase of a new electric vehicle and $4,000 for a used one.

The bill, which now heads to the Senate, received widespread praise from environmental groups.

Workers handle pipe on BP's Thunder Hose oil platform in the Gulf of Mexico about 160 miles southeast of Port Fourchon.
Workers handle pipe on BP's Thunder Hose oil platform in the Gulf of Mexico about 160 miles southeast of Port Fourchon.

“The Build Back Better Act would help us achieve the emissions cuts and nature gains we need to ensure a cleaner, healthier, safer future," Kameran Onley, director of North American policy and government relations at The Nature Conservancy, said in a prepared statement. "It includes $555 billion in climate investments and stronger policies to address the climate crisis than we’ve ever seen before."

However, environmentalists had mixed reactions to Friday's Interior Department report.

“We applaud the Biden administration for recognizing the serious flaws in the current oil and gas leasing program and making long-overdue reforms," said Athan Manuel, Sierra Club Lands Protection Program director. "But to truly tackle the climate crisis, we need to phase out all new leasing for fossil fuels on public lands and offshore — activities that contribute to nearly a quarter of this country’s greenhouse gas emissions."

A trade group whose membership includes oil and gas service companies in Houma-Thibodaux, Louisiana and across the U.S. also offered mixed reactions toward some of the latest actions.

National Ocean Industries Association President Erik Milito said the House measure, or reconciliation bill, does advance smart offshore wind and carbon capture policies. Offshore wind, he said, provides a "generational energy and economic opportunity," and widespread carbon capture will be critical to achieve worldwide climate change goals.

“However, the House language also provides for oil and gas provisions that are nothing more than punitive measures," Milito said. "These include arbitrary new fees that would add millions of dollars in annual operating costs, pricing out U.S. production."

— Courier and Daily Comet Executive Editor Keith Magill can be reached at 857-2201 or keith.magill@houmatoday.com. Follow him on Twitter @CourierEditor.

This article originally appeared on The Courier: Oil industry and President Joe Biden's administration on proposals

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