Barely a week after its representatives committed the United States to a COP28 agreement pledging to “transition away” from fossil fuels – oil, natural gas and coal – the Biden government held its first significant auction of offshore leases in the Gulf of Mexico Wednesday. It was not just any old lease sale, mind you, but the most massive one since 2015 with more than 72 million acres up for lease.

The Bureau of Ocean Energy Management (BOEM) reports that the government collected a total of $382 million in lease bonuses from an array of “big oil” companies, including Chevron, Shell, Hess (soon to become Chevron via merger), Anadarko (already a part of Oxy via a 2019 merger), Equinor and Repsol. Obviously, the Biden administration’s long refusal to hold a real lease sale in the Gulf had resulted in pent-up demand for new development acreage among the large, well-capitalized companies that are capable of investing billions of dollars in exploration for new deep-sea resources.

In a statement, Erik Milito, president of the National Ocean Industries Association (NOIA), emphasized the importance of maintaining an active program for offshore lease sales in U.S. waters. “Today signifies a critical point in American energy policy,” Milito said. “The U.S. offshore oil and gas industry is stepping up and making the investments vital to enhance our energy, economic, and national security for decades to come. However, the offshore industry’s commitment to American energy security and affordability comes at a time of significant and unnecessary uncertainty. Without Congressional intervention, this is the final lease sale until at least 2025.”

Of course, 2025 will be the year in which the next presidential administration begins. If it is a continuation of the Biden presidency – or that of another Democrat – then we can anticipate the new 5-year plan for offshore leasing introduced on December 15 will reign. That plan envisions the holding of just three offshore lease sales from 2024 through 2029. That is fewer sales than Barack Obama’s administration held in any single year, and a tiny fraction of the 47 sales envisioned by the 5-year plan adopted during the Trump administration.

Milito and NOIA clearly view the Biden plan as wholly inadequate to sustain a vital and healthy offshore industry into the future. “In our forward-thinking industry, securing new lease blocks is vital for exploring and developing resources crucial to the U.S. economy,” Milito said. “Additional offshore acreage is necessary to sustain and expand energy production in a region known for among the lowest carbon intensity barrels globally.”

That last point about carbon intensity should be a major consideration in any U.S. administration that is concerned about emissions. Despite all the grand fantasies discussed at global conferences like COP28 and the annual World Economic Forum meetings, the reality is that the world is going to need more and more oil and natural gas in the coming decades to sustain a modern society. That oil can either be produced in places like the U.S., with its strong regulatory system limiting carbon and methane emissions, or in places like the west coast of Africa or other developing regions with comparatively primitive regulatory structures.

Sadly, though, the politics surrounding climate alarmism, in which well-funded climate activist groups pour billions into Democratic political campaigns, dictate that any Democratic presidency must assume a hostile public posture toward industries that produce or use fossil fuels. Wednesday’s lease sale in fact happened only thanks to a series of court orders forcing the Biden Interior Department’s hand. Otherwise, Interior Secretary Deb Haaland, herself a lifelong opponent of oil and gas drilling, would have without any doubt continued to find ways to delay it through at least the end of Biden’s first term.

The just-adopted plan to hold just three additional sales across the coming six years is absurd on its face and would inevitably result in a shrinking U.S. offshore energy sector. “Without annual opportunities for investment here in the U.S., the investment necessary to fuel the U.S. and global economies will simply shift to other parts of the world, including regions with potentially lower environmental standards and higher emissions,” Milito said.

This is all about hardcore partisan politics, and it exemplifies one more reason why the political class is the very worst class in any society to be put in charge of making energy-related decisions for the rest of us.

David Blackmon on December 23, 2023

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