President Joe Biden attacks U.S. corporations for raising prices, but a new proposed regulation from the Bureau of Land Management would make it more difficult and expensive to produce oil and gas on federal lands, raising the price of American oil and gas—and increasing inflation.
That’s why Rep. Lauren Boebert, R-Colo., has sponsored a bill to defund the regulation.
Although America has been a net energy exporter since 2019, and produced a record 13.3 million barrels of oil per day in December, this hard-won progress is now under direct threat from the bureau’s proposed rule.
The rule would raise the costs of oil and gas exploration, driving small companies out of the oil business and limiting exploration opportunities for larger companies.
Boebert’s Restoring American Energy Dominance Act seeks to nullify the BLM’s damaging leasing rule and prevent the Biden administration from pursuing any similar policies. If signed into law, the bill would benefit American consumers and small businesses—and national security—by ensuring our American energy resources remain accessible to safe extraction and, therefore, affordable.
One of the most striking aspects of the rule is a substantial increase in bonding requirements for drilling operators. A bonding requirement is like a security deposit that companies pay to the government. Currently, the minimum bond for an individual lease is $10,000, while a statewide bond covering all of a company’s leases tops out at $25,000. The bureau’s rule would dramatically raise those minimum levels to $150,000 per lease and $500,000 for a statewide bond.
Raising bond requirements increases the upfront cost for projects, demanding higher future profits to justify the expense, limiting the pursuit of projects with moderate profit potential, and stifling innovation. Small companies cannot afford the new bond prices, so that places those companies at a disadvantage.
In addition to the problematic bonding requirements, the BLM rule proposes vague “preference criteria” that could be used to restrict leasing arbitrarily across wide swaths of federal lands containing oil and gas reserves. That would allow Washington bureaucrats to shut off access to energy-rich lands based on subjective judgments under the pretext of saving the environment.
Leases could even be denied if there is no preexisting production infrastructure in the area, creating a Catch-22 for exploration and discovery.
If finalized and implemented, the rule would reduce the supply of energy and raise energy costs for Americans.
Amid Germany’s renewable-energy mandates, German consumers pay more than three times more for electricity than do Americans. For German businesses, this means higher operating costs. Europe’s electricity has become so expensive that trade unions are warning of the threat of deindustrialization.
The anti-fossil fuel policies of the Biden administration are steering America toward the same destiny.
The BLM rule would reduce the resiliency of American energy to natural disasters, conflicts, or unforeseen crises that could disrupt global supply chains. It would lower oil and natural gas exports at a time when our allies need them.
The rule is especially ironic because Biden says that his administration is cracking down on “corporations that engage in price gouging”; that is, getting together to fix prices at high levels. The solution to price gouging is to allow more freedom of entry, so new firms come in and provide the product or service at a lower price. Keeping small companies out of any business increases the risk of price gouging.
Through innovative techniques such as horizontal drilling and hydrofracturing, America has vastly increased domestic oil and natural production. At a time of economic uncertainty and turmoil around the world, America should be doubling down on the major competitive advantage provided by our energy abundance—not squandering it at our own expense.
The Restoring American Energy Dominance Act would preserve America’s ability to produce oil and natural gas, benefiting the American economy and global allies alike.
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