Last week, the Biden administration formally canceled oil and gas lease sales in the Gulf of Mexico and Alaska’s Cook Inlet. This action denies oil and gas companies access to millions of oil and gas-rich acres they could be developing to increase supply and alleviate the pain of record-high gas prices averaging $4.40 per gallon.  

The cancellation is a dramatic shift from the president’s speech to the American people that he delivered from the White House podium just over a month ago. The fact that the speech was titled “Remarks by President Biden on Actions to Lower Gas Prices at the Pump for American Families” seems like a cruel joke at this point. In the speech, he made clear his bottom line: “If we want lower gas prices, we need to have more oil supply right now.” 

Canceling lease sales will further constrain supply and represents the exact opposite of what someone promising to deliver more oil should do. But don’t expect any administrative accountability. The Biden administration’s cancellation announcement included a heavy dose of blame. In a slight reprieve for President Putin, they have shifted their blame back to the U.S. energy industry and the courts. 

The Department of Interior that directly administers lease sales went on to explain that the reason for the cancellations was due to a “lack of industry interest” and “conflicting court rulings”. 

First, the “lack of industry interest” is beyond disingenuous. From day one, this administration has worked to make it harder and more expensive for oil and gas companies to develop our resources and efficiently deliver those resources to market. Biden officials have attempted to ban drilling on federal lands altogether and imposed massive new red tape. They have also lodged a series of unsupported allegations trying to paint the industry as profiteering speculators passively sitting on unused leases. 

To be clear on the matter of leases, according to analysis from the Western Energy Alliance, there are currently 37,496 onshore leases in effect which represents a 75% lease utilization rate. In the world of oil and gas production this is an extremely high utilization rate and the remaining leases that have been acquired by companies but not yet developed, are largely held up by the Biden administration’s refusal to approve affiliated permits.   

The Biden administration has also regularly ignored federal law that requires the Department of Interior to hold quarterly lease sales. After not holding lease sales for over a year, the administration’s first official offering for onshore lease sales cut available acreage by 80% and increased the royalty rates. In other words, Team Biden directly increased the cost of production while also limiting access, which has the intended result of discouraging production.

Beyond these direct barriers to development, the administration has been sending signals to capital allocators to not invest in traditional energy operations. The latest market rigging action comes in the form of a climate risk disclosure proposal at the Securities and Exchange Commission that would codify standards designed to shift investment away from oil and gas companies

To the extent a U.S. oil and gas company is able to secure capital to bid on a lease, either onshore or off, they face an increasingly hostile environment from an administration using  the weight of the government against them. Weird how the oil and gas industry may be cautious in pursuing these sales. 

Second, the claim of “conflicting court rulings” is convenient given that the complicated legal status is a direct result of the Biden administration’s own disregard for the law and strategic inaction. Last year, a federal court found that President Biden’s drilling ban was legally suspect and ordered the administration to resume its lease sales.  Months later the administration begrudgingly held “Lease Sale 257” in the Gulf of Mexico. 

A few months after the sale, a D.C. court sided with environmental allies of the Biden administration that had challenged the sale and threw it out because of alleged administrative deficiencies specific to that particular sale. Tellingly, the Biden administration decided to forgo any further defense of Lease 257. Now, Team Biden is referencing the outcome of this specific case as if it applies more broadly. Such an argument allows Biden to pretend like he would help if only he could. 

The reality is that there is nothing, legal or otherwise, that justifies canceling all lease sales in the Gulf of Mexico or in Alaska. If President Biden truly wanted to help the American people and alleviate the harm of high gas prices, there are ample available options including reversing this latest decision. Rhetoric aside, it appears as if he just doesn’t want to.