'Ugly for consumers': Biden White House's low number of oil and gas leases create scarcity concerns
U.S. Oil & Gas Association President Tim Stewart joins 'FOX & Friends First' to discuss the Biden White House's proposal for the fewest offshore drilling leases in history.
The Biden administration's plan to hold a historically-low number of offshore oil and gas lease sales may indirectly threaten its offshore wind energy goals, thanks to a key provision in the 2022 Inflation Reduction Act (IRA).
The Department of the Interior (DOI) issued a congressionally-mandated five-year offshore oil lease plan last month that included just three fossil fuel lease sales through 2029. However, the IRA, Democrats' climate and tax bill passed in August 2022, prohibits the DOI from issuing an offshore wind development lease unless the agency has offered at least 60 million acres for offshore oil and gas leasing at some point in the previous 12 months.
"It's constructively a time of moratorium on the issuance of offshore wind leases in those gap years. We recognized that as soon as they came out with the leasing program," Erik Milito, the president of the National Ocean Industries Association (NOIA), told Fox News Digital in an interview. "We were a bit surprised that they wouldn't do oil and gas lease sales annually because annual sales are needed if they want to have uninterrupted wind lease sales in the offshore."
"Needless to say, there is a lot of uncertainty with regard to both offshore oil and gas lease sales and offshore wind lease sales over the next five to 10 years," he continued. "If you have gaps in lease sales, then you have fewer opportunities for companies to bring forward projects and bring offshore wind power online, so it would be more likely to have a detrimental effect on the administration meeting its goals."
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The Biden administration released its long-awaited oil leasing proposal in September, proposing a record-low three offshore lease sales in a departure from past plans issued by Democratic and Republican administrations. (Getty Images)
Because of the IRA's provision tethering future offshore fossil fuel leases to future offshore wind leases, the DOI's five-year plan — which includes three fossil fuel lease sales in the Gulf of Mexico in November 2025, November 2027 and November 2029, respectively — indirectly creates three one-year periods in 2025, 2027 and 2029 where the federal government would be prohibited from holding wind lease sales.
The administration's three one-year moratoria on offshore wind leasing could disrupt its aggressive goal of deploying 30 gigawatts of offshore wind energy by 2030, the most ambitious goal of its kind worldwide. To achieve the goal, the DOI will likely need to lease millions of additional acres in Maine, New York, the Central Atlantic, the Gulf of Mexico, the Carolinas, California and Oregon.
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Just two tiny offshore wind farms are currently operational, while several large-scale projects along the East Coast are in various stages of development and permitting. Even if all the currently proposed projects under development were to be completed by 2030, the administration would remain far short of its 30-gigawatt goal.
And multiple in-development projects are facing rising costs that could lead to future cancelations. Earlier this month, the New York State Public Service Commission rejected requests from a group of offshore wind energy developers who asked to renegotiate existing contracts amid rising persistent inflationary pressures, a decision that could make the projects impracticable.
President Biden points to a wind turbine size comparison chart during a meeting about the Federal-State Offshore Wind Implementation Partnership on June 23, 2022. (Drew Angerer/Getty Images)
"In the IRA, we prohibited Interior from issuing wind and solar leases unless the Department also holds significant oil and gas lease sales, both on- and offshore," Sen. Joe Manchin, D-W.Va., the chairman of the Senate Energy and Natural Resources Committee, said during a hearing last week. "As a result, Interior was forced to include oil and gas lease sales in their recently released 2024 to 2029 Leasing Program."
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"To be clear, the new five-year leasing program falls well short of what we should be doing by including only three oil and gas sales. This is barely a quarter of what the Obama administration approved for the last five-year program," Manchin added. "But it’s clear we would have gotten exactly zero without the IRA."
After unveiling the 2024-2029 five-year oil and gas program in September, Interior Secretary Deb Haaland boasted that it "represents the smallest number of oil and gas lease sales in history" and explained it would "support the growing offshore wind industry."
Sen. Joe Manchin, D-W.Va., chairman of the Senate Energy and Natural Resources Committee, questions Interior Secretary Deb Haaland during a hearing on May 2, 2023. (Kevin Dietsch/Getty Images)
In addition, NOIA's Milito said the five-year plan reflected the administration's overarching goal of shutting down domestic oil and gas production despite its potential impacts on green energy development.
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"It's just one in a long line of decisions that reflects the continued statements of the administration and the president that they want to end oil and gas drilling," he told Fox News Digital. "They had the leasing pause on day one, and the president said it as recently as August.
"So, when they say it and then they back it up, it just reflects the agenda of the administration to end domestic energy production. But at the same time, it's frustrating because demand is not going down — the energy has to come from somewhere."
The White House did not respond to Fox News Digital's request for comment.
