Tuesday, July 23, 2024
29 C
Brunei Town

Biden increases oil royalty rate, scales back lease sales

BILLINGS, MONTANA (AP) – The Interior Department on Friday said it’s moving forward with the first onshore sales of public oil and natural gas drilling leases under United States (US) President Joe Biden, but will sharply increase royalty rates for companies as federal officials weigh efforts to fight climate change against pressure to bring down high gasoline prices.

The royalty rate for new leases will increase to 18.75 per cent from 12.5 per cent. That’s a 50-per-cent jump and marks the first increase to royalties for the federal government since they were imposed in the 20s.

Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no “rational explanation” for cancelling them.

The government held an offshore lease auction in the Gulf of Mexico in November, although a court later blocked that sale before the leases were issued.

Friday’s announcement comes amid pressure for Biden to expand US crude production as the pandemic and war in Ukraine roil the global economy and fuel prices have spiked. The Democrat faces calls from within his own party to do more to curb emissions from fossil fuels that are driving climate change.

Leases for 225 square miles of federal lands primarily in the West will be offered for sale in a notice to be posted tomorrow, officials said. The parcels represent about 30 per cent less land than officials had proposed for sale in November and 80 per cent less than what was originally nominated by the industry. The sales notices will cover leasing decisions in nine states – Wyoming, Colorado, Utah, New Mexico, Montana, Alabama, Nevada, North Dakota and Oklahoma.

An oil well east of Casper, Wyoming. PHOTO: AP