Two things affect the price of oil, supply and demand. When supply and demand are in balance, oil prices remain steady. When they’re not, prices fluctuate. It’s a simple concept that almost anyone can grasp, which begs the question of why the Biden administration continues to take steps to undermine the United States’ ability to produce the domestic energy that consumers demand.
Federal lands and waters provide approximately 24% of all domestic oil production and roughly 11% of U.S. natural gas production. But a new rule from the agency that oversees those lands threatens to pour cold water over that proverbial fire.
The U.S. Department of Interior’s Bureau of Land Management (BLM) proposes a rule that would put “conservation leases” on an equal footing as other permitted uses for the more than 245 million acres of federal lands. The proposal would significantly shift how the agency manages public lands under its existing “multiple use” mandate.
The “multiple use” doctrine requires BLM to manage public lands under its jurisdiction for the benefit of multiple user groups to ensure public lands best meet the present and future needs of the American people – and energy security is a big part of that equation.
The proposed rule change comes at a bad time for U.S. energy security. Saudi Arabia and the other members of the Organization of the Petroleum Exporting Countries (OPEC), which control nearly 40 percent of the world’s oil supply, have grown increasingly anti-Western in recent years. Meanwhile, Russia’s war in Ukraine has caused global oil prices to surge, giving OPEC more leverage over the market.
Oil prices rose to $80 a barrel in mid-July, their highest point in nearly three months. Prices remain below recent record highs, but that could easily change. With tightening oil supplies due to cuts announced by Russia in August and scheduled reductions from OPEC designed to push output to a two-year low, Congress needs to read the tea leaves and take action to ensure U.S. consumers have an adequate oil supply – at affordable prices.
We need either less demand or more supply to change the current market fundamentals. And with demand for fossil fuels predicted to increase through the next decade and geopolitics being what they are, the obvious answer for policymakers is to focus on increasing supply here at home.
The proposed rule threatens to undermine BLM’s multi-use mandate. Ambiguity around its implementation abounds, and the new rule could even allow BLM to prioritize conservation leases over other land uses mandated for the agency’s consideration. As one former BLM specialist recently wrote, “The agency has failed to explain how a ‘conservation lease’ would be more advantageous than the existing policy of partnering with other organizations that have shared values.”
The new rule is a blatant effort by unelected bureaucrats inside the federal agency to alter BLM’s management practices to favor conservation and minimize critical land uses like resource and mineral development. By rushing to create a separate conservation category, the agency is altering its practices for ideological reasons.
Only about 4% of federal lands are leased for oil and gas development. Allowing the government to reduce this already small portion of activity on federal land further will exacerbate supply problems. Meanwhile, the National Environmental Policy Act and the National Historic Preservation Act already facilitate the preservation of critical areas in this country.
In addition to the loss of potential energy supplies, the federal and state governments also stand to lose much-needed tax and royalty revenues from the more restrictive BLM land designation.
Last year, the Interior Department distributed nearly $22 billion generated from energy production on federal lands and waters and tribal lands. Those funds flow directly into programs that address coastal conservation, restoration, and hurricane protection programs. Added to these funds are billions of dollars – $12 billion in 2019 alone – in revenue from energy production on federal lands and waters to federal and state governments to pay for other programs.
The Interior Department was created to manage America’s vast natural resources for the nation’s security and prosperity. If it’s going to disregard one of the main reasons for its founding, perhaps the department – and its 70,000 employees – has outlived its usefulness. Surely, Congress can find a better use for the $15 billion spent on the Interior Department annually?
As we face increasingly hostile relations with members of the OPEC cartel and competition for energy supplies from China, Congress and the Biden administration should be focused on ensuring American consumers have an abundant, affordable, and secure supply of the energy they depend on daily. We need policies that bolster market stability and security for the long term. The BLM rule prioritizing conservation over other land uses is not the right policy for these turbulent times.
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