Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley
More than three weeks ago, Judge Terry Doughty from the U.S. District Court for the Western District of Louisiana ordered the Department of Interior to end their “pause” on granting new leases for energy development and production on federal lands and waters. In his ruling, Doughty wrote that the agency lacked the legal authority to unilaterally “pause” lease sales in the way that they’ve done since January.
Despite the ruling, Interior still has not said when lease sales will resume and in what capacity. Interior officials have promised to release a comprehensive report on the leasing program, which hopefully will give the public and U.S. industry a better understanding of the policy going forward. While the department had indicated it would issue the report in early summer, the release date continues to be pushed back.
The uncertainty comes at a time when the U.S. economy is re-opening in full, and travel is increasing dramatically. According to the American Automobile Association, more than 47 million Americans hit the road this past weekend, the second highest Independence Day travel on record after 2019.
Meanwhile, over the past four weeks, total stockpiles of oil, including the Strategic Petroleum Reserve have fallen at a rate of 1.15 million barrels a day, marking the biggest decrease since the Energy Information Administration started keeping records in 1982. Domestic production is holding at roughly 15% below the pre-pandemic peak. If U.S. production does not increase, foreign sources will fill the gap.
With oil prices continuing to rise, expect moderate Democrats to pressure the Administration to stop hindering domestic production through policies such as the federal lands leasing ban. The Biden Administration may already be feeling the heat.
“We’re closely monitoring the OPEC+ negotiations and their impact on the global economic recovery from the COVID-19 pandemic,” said a White House spokesperson. ”Administration officials have been engaged with relevant capitals to urge a compromise solution that will allow proposed production increases to move forward.”
We can expect policy discussions around rising energy demand to be the elephant in the room for the rest of July as policymakers go through the final negotiations on infrastructure legislation.
For more information on the Council’s advocacy efforts or to get involved, contact SVP Government Affairs & Counsel Tim Tarpley.
Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.