The federal oil and gas leasing program is broken and doesn’t work for anyone except oil executives—the same ones who pocketed more than $10 billion in COVID-19 relief payouts while working families were hit hard by the pandemic. Local communities and tribes near public lands and on the coasts know all too well that the system is wrought with speculation, waste, and low returns for taxpayers. And at the same time, it is putting sensitive public lands, water, and wildlife at risk.
Following a popular commitment made on the campaign trail, President Joe Biden instituted a pause on new oil and gas leasing on national public lands while the U.S. Department of the Interior conducts a review of the program. Importantly, the targeted pause does not affect oil and gas under state, tribal, or private subsurface ownership. It is a commonsense move that will allow the administration to become a better steward of the public lands owned by all Americans, from ensuring that the public is involved in land management decisions to providing a fair return to taxpayers for the use of their resources.
The response from the oil industry, however, has been nothing short of dramatic, claiming that the pause will drastically affect production and jobs. A new Center for American Progress analysis finds that these statements are outright false. In reality, companies could continue to begin new drilling operations on unused leases at the current rate for at least the next 10 years without access to any new leases. Despite the industry’s “sky is falling” claims, federal oil and gas development is unlikely to change substantially with a pause on new leasing because the industry already has access to so many acres of public lands.
Oil and gas companies do not need new leases on public lands
While the industry’s fearmongering would seem to suggest that they are running out of leased lands on which to produce, more than half of all acres currently leased—13.9 million acres in total—are not yet being used to produce oil or gas. Over the past four years, the Trump administration orchestrated a fire sale of public lands, and companies stockpiled leases on millions of those acres. By sitting idle on these leases, the industry is not creating any revenue or jobs—energy or otherwise. It is, however, making a sizable parcel of public lands unavailable for other valuable uses, such as recreation and conservation, at the taxpayer’s loss.
The leasing pause only halts the sale of new leases on public lands. It does not affect current production, which can continue on all lands that are currently leased and producing. Furthermore, it does not prohibit companies from applying for new permits to drill or from starting production on the millions of acres of idle public lands for which they already have leases.
Using the oil and gas industry’s own track record, CAP estimated how long it would take for companies to start production on all of these idle acres, if they so desired. Over the past five years, the industry has started production on an average of 106,980 acres each fiscal year. At this rate, the current stockpile of idle acres can see the industry through fiscal year 2030 without requiring a single new lease. In other words, oil and gas companies already have access to enough unused leases to last until 2030, when General Motors, Ford, Volvo, and other major automakers will be well on their way to selling only electric vehicles—and the market will have realistically turned further away from oil.
Under current leasing laws, a standard lease on public lands expires after 10 years if it doesn’t go into production. CAP’s analysis shows that, at current rates, the industry is actually slated to let 12,941,936 acres of leased lands expire, contradicting claims that companies are desperate for new leases. Any reduced production would be a result of the industry’s own behavior. A caveat to the expiring leases is the fact that there are many ways for companies to lengthen the terms of their nonproducing leases to avoid expiration and hold onto public lands. Therefore, it’s likely that the industry will have even more than 10 years to begin producing on the lands it has already leased.
Furthermore, CAP’s analysis may actually undercount how many years the industry can survive—and thrive—in the absence of new leases, as it does not take into account the nearly 13 million acres of leased lands that are already…