The Interior Department said it will not move forward with three planned oil and gas lease sales in the Gulf of Mexico and Alaska’s Cook Inlet, meaning the administration will not hold a lease sale on coastal waters this year.
The announcement late Wednesday night, which comes as President Joe Biden faces record-high gas costs, will halt hopes of offshore drilling on millions of acres of federal land. Alaska’s Cook Inlet was home to more than 1 million acres of federal land alone.
The Interior Department confirmed the news in an email to the Washington Examiner late Wednesday.
“Due to lack of industry interest in leasing in the area, the Department will not move forward with the proposed Cook Inlet OCS oil and gas lease sale 258” or the Cook Inlet project, DOI said.
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The decision not to move ahead with two leases in the Gulf of Mexico region, meanwhile, was due to “conflicting court rulings” that delayed work on the proposed lease sales, a DOI official told the Washington Examiner.
The announcement comes just weeks before the federal government’s five-year offshore drilling program is slated to expire in June, creating new uncertainty over the future of leasing projects under President Biden.
It also comes at a difficult time for the oil and gas market. Fuel costs in the United States have soared, in part because of the war in Ukraine and supply chain snags.
On Thursday, the price of gasoline climbed to a national average of $4.41 per gallon, according to AAA— the third consecutive record-high this week. The average cost per gallon has increased by nearly 50% since the same point last year, and overall energy costs are up by nearly a third, according to the Consumer Price Index.
Republicans and industry groups reacted to the news of the paused lease sales by blaming Biden for high prices, and many argued that the decision runs contrary to his recent calls to increase domestic oil and gas supply as a means of reducing the high fuel costs.
“Unfortunately, this is becoming a pattern — the administration talks about the need for more supply and acts to restrict it,” Frank Macchiarola, the American Petroleum Institute’s senior vice president of policy, economics, and regulatory affairs, told the Washington Examiner in an email.
“As geopolitical volatility and global energy prices continue to rise, we again urge the administration to end the uncertainty and immediately act on a new five-year program for federal offshore leasing,” he added.
Another major concern from industry groups is that the administration has not yet drawn an offshore program replacement plan ahead of the June expiration date. The government is required by law to provide a new five-year plan, but so far, the administration has not yet presented one — nor has it indicated when it plans to do so.
Once submitted, offshore drilling proposals typically take between six and 12 months to be finalized and approved. A lapse in the five-year program could drive down production by roughly 500,000 barrels per day, according to a March analysis by API and the National Ocean Industries Association.
“The longer we go without being able to explore and develop new leases offshore, the longer we weaken a key, proven national strategic energy asset in the U.S. Gulf of Mexico,” NOIA President Erik Milito said in a statement accompanying the research.
A lapse in the five-year offshore plan “could jeopardize American energy security, cost thousands of jobs and billions in lost state and local revenues,” one senior industry official said.
Rep. Bruce Westerman of Arkansas, the top Republican on the House Natural Resources Committee, blasted the cancellation of the offshore leases as a “slap in the face to Americans”:
“Mere days after gas prices hit historic highs, President Biden is killing new offshore leases for the rest of the year. This keeps us squarely in the arms of OPEC+ countries to meet our energy needs,” Westerman said in a statement. “I can’t imagine a more tone-deaf, short-sighted decision that jeopardizes our economic and energy security without doing a single thing to help the environment or the American people.”
