Gulf oil lease program smallest in history as Biden bets on future offshore wind

The Biden administration is releasing its finalized five-year offshore drilling program, which it boasts provides the “fewest oil and gas lease sales in history.

The rules were first proposed in late September, and as was in the proposed plan, the final program allows for three oil and gas lease sales in the Gulf of Mexico, which will be held in 2025, 2027 and 2029.

Oil companies will have one last opportunity Wednesday to purchase leases, and then there will be no more lease sales until 2025 under the plan.

The administration designed its program, according to the notice, to allow for the minimum amount of oil and gas leases in the Gulf while still meeting the Inflation Reduction Act (IRA) requirements for offshore wind.

The IRA prohibits the Bureau of Ocean Energy Management from issuing leases for offshore wind development unless the agency offers at least 60 million acres of offshore oil and gas leasing in the previous year. With the three lease sales, the program will allow the Biden administration to reach its goal of 30 gigawatts of offshore wind by 2030.

Since taking office, President Joe Biden has been trying to reduce oil and gas development on public land as much as possible. A week into his presidency, Biden issued a moratorium on all new oil and gas leases on public lands, which a federal judge in Louisiana shot down the following summer. Despite the setback, the Biden administration has kept leasing on federal lands to a trickle.

Tim Stewart, president of the U.S. Oil and Gas Association, told Just The News that these restrictions have a large impact on the economy as operations on federal lands account for between 15% and 20% of oil and gas production in the U.S.

“So with this announcement The Administration has shut down 1 of 5 barrels of future production. Imagine if they announced they were shutting down 20% of our agriculture production or 20% of our manufacturing capacity.  What if they announced they were throttling down 20% of our rail capacity and canceling 1 in 5 airline flights for the next 15 years?  There would be drastic economic consequences. It is the same situation here,” Stewart said.

Larry Behrens, communications director for Power the Future, told Just The News that the state of the economy should have led the administration to reconsider its restrictions on oil and gas production.

“Fewer American jobs and less energy security might just be the worst Christmas present ever, but that’s exactly what Joe Biden is giving us. To make matters worse, prices are still soaring and debt rising while the Biden administration is proud of the fact they are shutting off critical production and the possible revenue that comes with it,” Behrens said.

The small Gulf leasing program, according to the Interior Department announcement, is designed to “phase down oil and gas leasing” and “enable offshore wind programs to continue to rapidly grow.”

Stewart said that one offshore oil platform produces the energy equivalent of dozens of offshore wind platforms, and the energy from petroleum isn’t dependent on certain weather conditions. Petroleum, Stewart added, is also used to make thousands of products.

This past year has also thrown the future of the offshore wind industry into doubt. Inflationary pressures and high interest rates have led dozens of developers to negotiate their contracts. Concerns over rising costs to consumers led New York officials to deny one request, and one major offshore wind project off the coast of New Jersey was canceled.

Despite these setbacks, Biden plans to make offshore wind the focus of America’s energy future.

In addition to the restrictive policies of the Biden administration, the oil and gas industry has also faced the same problems as the offshore wind industry, but without the substantially larger subsidies that renewables receive. The industry still managed to hit record-high production levels this year.

Oil companies, especially in Texas’ Permian Basin, have been engaging in billion-dollar mergers and acquisitions that suggest they see demand for petroleum continuing well into the future.

Stewart said production levels are a “double-edged sword.” The U.S. lacks refining capacity for the light sweet crude that is a large portion of the oil and gas production. Most refining is calibrated to refining heavy or sour crude, which is what’s coming out of the Gulf of Mexico.

“That is one reason why this is so problematic. The Administration is choking off the US supply to our US based refiners and forcing them to turn to Venezuela and other countries for supply,” Stewart said.

Stewart said it would require substantial billion-dollar investments in refining capacity to utilize the light sweet crude, which the Biden administration would also oppose. Without bringing more production of heavy crude online, the problem will persist for years.

Behrens said, besides the impacts to the U.S. economy, Biden’s energy policy will also make U.S. producers less competitive against other oil-producing countries.

“Strong energy production is a testament to America’s workers, but Joe Biden sees it as a reason to kneecap them at every turn. No doubt this decision is a great gift to Saudi Arabia, Venezuela and Iran, but the United States is stuck with another year of ‘How the Biden Grinch Stole American Energy Independence.,” Behrens said.