Bloomberg: Greenflation is very real and, sorry, it’s not transitory
Advocates of wind and solar power often tell us that these energy sources will result in lower energy prices, but the facts on the ground do not support this claim.…
Last Friday, when many of us were recovering from eating too much on Thanksgiving or doing our holiday shopping, the Biden administration released a new report from the Department of the Interior that recommends raising the fees paid by energy companies to produce oil and natural gas on federal lands.
Approximately 10 percent of the oil produced in the United States comes from federal onshore oil leases, meaning this proposal would make it more costly and difficult to develop a significant portion of America’s oil production.
The report recommends raising the government’s royalty rate from the minimum 12.5 percent royalty. The report also said the Interior Department should avoid leasing in areas where oil and gas activity could conflict with wildlife or other cultural resources, according to the Wall Street Journal.
Surprisingly, the report did not call for an outright ban on oil and gas leasing on public lands, which is something President Biden campaigned on before the election. However, it appears the Biden administration will try to reduce oil and natural gas production by slowing the sale of mineral leases and making it more expensive to do business on federal land.
Fracking has made the United States the largest producer of oil and natural gas in the world, but policies like these send a clear signal to the energy industry that this administration views American energy producers as liabilities instead of assets.
It is no wonder that many oil and gas producers are hesitant about spending money to increase production when they know that the Biden administration will take steps to make it more difficult and less profitable to do so.
This “chilling effect” is a big reason why gas prices climb to their highest levels since the Obama administration. This chilling effect would not be present if President Trump were still in office.