United States Restarts Permitting Process For Natural Gas Exploration

While the International Energy Agency warned last week that oil supply could keep shrinking worldwide — and recommended measures to conserve oil — the U.S. government announced measures that hopefully will increase other energy supplies. Specifically, on March 18, the U.S. Department of the Interior (DOI) announced that it will move forward to approve new oil and gas leasing on federal lands.

The department had previously delayed permitting and leasing after a federal court barred the Biden administration from using its preferred method to calculate the climate costs of such actions. (Click here for more information on that ruling.)

Last week, an appeals court halted the lower court’s decision. According to DOI spokesperson Melissa Schwartz, that ruling meant the department could continue “its planning for responsible oil and gas development on America’s public lands and waters.”

The Biden administration also announced last week that, in an effort to reduce Europe’s dependence on Russian energy, it will issue orders that expand the amount of liquified natural gas (LNG) that the United States exports. The Energy Department said two authorizations that it already has issued would give facilities the ability to export an additional 720 million cubic feet per day of natural gas. The Hill has more information here.

In less positive news, meanwhile, Peter DeFazio (D-Ore.), Sen. Sheldon Whitehouse (D-R.I.), and Sen. Elizabeth Warren (D-Mass.) are pushing for approval of legislation, the Big Oil Windfall Profits Tax Act, which would levy a new quarterly tax on U.S. energy producers.

This proposed excise tax would apply to every barrel of oil produced by large companies and would be equal to 50 percent of the difference between the current price of oil and the average price per barrel from 2015 to 2019. The revenue from this proposal would fund a new tax credit that would be paid to individual taxpayers on a quarterly basis.

MSCI and other trade associations are concerned that this legislation would raise taxes on energy producers and harm their ability to provide the fuel industries need to operate and expand. Stay tuned to Connecting the Dots for more information on whether or not this legislation moves forward.

In the meantime, readers might recall that a version of this tax was signed into law by President Jimmy Carter and repealed in 1988. Experts have estimated that tax increased U.S. reliance on foreign oil and ultimately did not raise the revenues that had been promised by its proponents.