US Government Cancels Oil and Gas Leases Amid Record Fuel Prices

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some of the highest energy prices in its historythe Biden administration canceled oil and gas lease sales in the Gulf of Mexico and Alaska’s Cook Inlet.

According to the American Automobile Association (AAA), National fuel prices average a whopping $4.43 per gallon of regular gasoline. Diesel is much higher at $5.56 and is speculated to endure massive shortages in the coming months as reports from the Northeast have indicated record inventories are already being seen. In the past twelve months, fuel prices have risen nearly $1.50 a gallon and most market analysts expect rates to continue rising through the summer. Although not everyone agrees who should be blamed for our current situation.

That’s because there are a plethora of possible suspects.

As the government agency officially responsible for canceling leases, the Department of the Interior claimed that it was actually the energy sector that didn’t want to drill in alaska.

“Due to the lack of industry interest in leasing in the area, the Department will not move forward with the proposed Cook Inlet OCS 258 oil and gas lease sale,” a DOI spokesperson said. fox business in a statement on Thursday.

“The Department will also not move forward with the 259 and 261 lease sales in the Gulf of Mexico region, as a result of delays due to factors including conflicting court rulings that affected work on these proposed lease sales.”

Lease Sale 257 (also located along the Gulf) was similarly invalidated in January.

Meanwhile, the oil industry is currently enjoying record profits as energy prices soar. the new yorker he even went so far as to suggest that the industry was actively involved in war profiteering, citing that ExxonMobil made $5.5 billion (after taxes) in the first three months of 2022, $6.3 billion from Chevron and $5.8 billion from Chevron. ConocoPhillips. Here, we have the common excuse that the war in Ukraine is the real culprit for the rise in oil prices and that the situation has been made vastly worse by greedy energy companies.

It is difficult to disagree with this position, especially since we know that wars always tend to increase the cost of raw materials. Russia is also a major oil-producing nation and its actions directly influence the world market. Although its author would argue that most of the burden falls on neighboring states, especially Germany. While the situation in Ukraine has undoubtedly contributed to the current energy woes, crude oil prices spiked sharply in late 2020 as oil futures began trading on the assumption that Joe Biden would soon be in the White House.

Some of the speculative action was the result of prices recovering after demand plunged at the start of the pandemic. However, the Biden administration had expressed a strong interest in America’s transition to all-electric vehicles and what he said would become a more environmentally conscious economy. Unfortunately, almost every nation that has done the same has endured rising energy costs as penance for supposed progress.

One of Biden’s first actions as president was an executive order to suspend federal oil and gas leases. While this was immediately challenged by the Republican-led states that challenged the ban, and a federal judge ruled in its favor overcoming the suspension and opening a lease sale of more than 80 million acres in the Gulf of Mexico for the extraction of oil, environmental groups sued to stop the leases in court and finally succeeded. Last year, the White House also called for an end to tax benefits for oil and gas production. The most contentious decision, though, was Biden’s cancellation of the Keystone XL cross-border permit, effectively ending the 12-year project to funnel affordable fuels from Canada to US refineries.

Last month, the Interior Department declared that it would restart the sale of oil and gas leases on federal land. However, the agency reduced the amount of land under consideration by 80 percent and increased the amount of royalties energy companies would have to pay the government if they extracted anything of real value.

Despite the Biden administration have asked the industry to produce more oil to help reduce costs, has repeatedly taken actions that stifled domestic production. But his current position is to blame the war in Ukraine for the high cost of energy and rising inflation that is making everything worse.

Inflation is also part of the problem and is not limited to any one party. Years of relatively unlimited government spending went into overdrive during the pandemic, only to be followed by massive spending bills. The United States is currently facing currency devaluation on a scale not seen in decades and is only expected to get worse in the fall of 2022. This creates a snowball effect on all commodities, including those that rely on oil extraction.

The reality of the matter now largely depends on what news outlets you consume and what your particular bias is. Most of the legacy media and the Democratic Party have decided to focus on Ukraine and the oil companies. Meanwhile, the independent media, foxnewsThe US and the Republican Party have focused on the decisions made by the White House and the inability (or unwillingness) to stimulate production, suggesting that it is at odds with the green agenda.

They are all right in their criticism. However, the US government only has direct control over its own spending and how it decides to regulate industries that have long since abandoned the free market to become entwined with political action. If the price of gasoline must come down, there are only a handful of realistic solutions. The government may try to force the industry to increase oil production or deregulate it in the hope that competition will eventually emerge to help drive down prices. While the latter option would take years to show any results, the former could see changes in a matter of months. But the core issue of supply and demand is what is at stake here and no one should assume that a monopoly of ultra-massive oil companies will increase production while profits are so high.

Perhaps Alaska really was too expensive for them to inspect and take advantage of.

Even Donald Trump had a hard time getting more than a handful of stakeholders when opened the Alaska Arctic National Wildlife Refuge (ANWR) for drilling in August 2020. Climate activists also made the plan look unsavory on the national stage, even though local residents were widely in favor of the prospect of the oil industry creating new jobs. the state itself Than interested. But there is little incentive for oil companies to invest when they are likely to gain more by sitting back and letting high prices do the hard work for them. And the timing of ANWR’s opening coincided with regional lockdowns that discouraged oil consumption to the point where prices per barrel turned negative.

However, Alaska’s argument is more difficult to relate to the canceled Keystone XL or the suspended leases around the Gulf of Mexico.

While I tend to agree that today’s oil prices are influenced by a multitude of factors, tough decisions must be made if the economy is ever to return to normal. Tragically, the few actions the White House and Congress have taken to address the fuel problem seem entirely designed to make matters worse. Whether that is a coincidence, part of advancing the Biden administration’s green agenda, or simply the result of American leadership being woefully out of touch with the plight of the common man, no one knows. But it is becoming increasingly ridiculous to suggest that our current course of action is somehow the correct one, as the evidence to the contrary continues to mount almost daily.

[Image: evgenii mitroshin/Shutterstock]

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