Biden Punishes Drillers With 15-Fold Increase In Permitting Costs, Plans To Block Arctic Oil Extraction

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by Tyler Durden
Friday, Apr 12, 2024 - 11:20 PM

One week after the Biden administration slapped new regulations on key power grid components, the Washington Post reports that US oil and gas companies will face a 15-fold increase in costs to drill on federal land, under a new rule released on Friday.

Workers operate a drilling rig while plugging an abandoned oil well north of Shelby, Mont. (Adrián Sanchez-Gonzalez for The Washington Post) (Adrian Sanchez-Gonzalez/For The Washington Post)

Under it, the Interior Department's Bureau of Land Management will require drillers to pay $150,000 per lease on federal lands, up from $10,000 - the first comprehensive update to the federal oil and gas leasing program in over three decades.

Fossil fuel companies will also be required to pay higher royalties to the government on oil and gas extracted from federal lands - jumping from 12.5% of revenue to 16.67%.

That's not all...

The rule comes as the Biden administration readies a sweeping plan to limit future oil drilling across roughly 13 million acres of Alaska's North Slope, which the US set aside a century ago as an emergency supply.

That initiative, set to be finalized in the coming days per Bloomberg, comes as both oil executives and Alaska lawmakers have sounded the alarm over the plan - saying that it could thwart oil and gas development throughout the reserve, even on existing leases.

The Interior Department said in a preamble the regulation wouldn’t affect existing leases. But the proposed rule text doesn’t offer similar, explicit assurance. Instead, it proposes to give the government broad authority to limit or bar access to existing leases, “regardless of any existing authorization.” Oil leasing and infrastructure development would be presumed not to be permitted unless specific information clearly demonstrates the work can be done with “no or minimal adverse effects” on the habitat.

"This would be bad for America’s energy security," Sen. Lisa Murkowski (R-AK) said on X, adding "It would openly defy federal law while ignoring rising energy prices and growing global volatility. "

"It would yet again sanction Alaska instead of nations like Russia, Iran, and Venezuela," she added.

The Biden administration has argued that the changes are necessary to protect 'sensitive landscapes' that provide habitat for polar bears, migratory birds and caribou.

"We must do everything within our control to meet the highest standards of care to protect this fragile ecosystem," said Interior Secretary Deb Haaland said in announcing the measure last year, Bloomberg continues.

How very inflationary...