Pres. Joe Biden to increase royalties for Exxon & other majors

Dec 05, 2021 News

– says current arrangement with oil companies short-changes Americans

By Kiana Wilburg

Kaieteur News – US President, Joe Biden recently disclosed his aggressive plans to reform the American oil and gas industry, starting with the increase of royalties paid by ExxonMobil and other oil majors.

US President, Joe Biden

This was specifically noted in a U.S. Department of the Interior (DOI) report that was prepared in response to an Executive Order 14008 on “Tackling the Climate Crisis at Home and Abroad.” The order stipulated that the DOI conduct a review of Federal oil and gas leasing and permitting practices.
During that process, DOI made a damning observation. It said, “Modernization of the Federal oil and gas programme has been delayed for decades to the detriment of the American public, their public lands and waters, the environment, wildlife, and more. In its current form, the programme falls short of serving the public interest in a number of important respects. It provides insufficient opportunities for public input, shortchanges taxpayers and States, and tilts toward opening up low potential lands without adequately considering competing multiple-use opportunities.”
Furthermore, the review found that the Federal oil and gas programme which fails to provide a fair return to taxpayers, even before factoring in the resulting climate-related costs that must be borne by taxpayers; inadequately accounts for environmental harms to lands, waters, and other resources; fosters speculation by oil and gas companies to the detriment of competition and American consumers; extends leasing into low potential lands that may have competing higher value uses, and leaves communities out of important conversations about how they want their public lands and waters managed.
The document also notes that the fiscal components of the onshore Federal oil and gas programme are particularly outdated, with royalty rates that have not been raised for 100 years. Companies typically have been charged 12.5 percent the value of oil and gas extracted from onshore leases, under a rate dating to the 1920s. For offshore leases, royalty rates have ranged recently from 12.5 percent to 18.75 percent. But the Biden administration wants these rates increased.
Kaieteur News also observed that the report identifies a number of recommendations that begin to modernise Federal land management. The reforms serve three main programmatic goals: Provide a fair return to the American public and States from Federal management of public lands and waters, including for development of energy resources; design more responsible leasing and development processes that prioritise areas that are most suitable for development and ensure lessees and operators have the financial and technical capacity to comply with all applicable laws and regulations; and create a more transparent, inclusive, and just approach to leasing and permitting that provides meaningful opportunity for public engagement and Tribal consultation.
DOI said these recommendations represent an overdue reform agenda, which is urgent even as the Interior Department begins to take into account new stressors and new opportunities for public lands and waters, including addressing biodiversity loss, tackling climate change, and deploying new technology ranging from harnessing offshore wind in public waters, to sequestering carbon on public lands.
Accordingly, DOI said the report focuses primarily on necessary reforms to the fiscal terms, leasing process, and remediation requirements related to deficiencies with the Federal oil and gas programme.
As the Department considers how to best implement the recommendations contained in the report, it said the Administration will continue to work closely with Congress, State, Tribal and local officials, industry, labour organisations, environmental justice communities, and stakeholders to ensure that proper consideration is given to creating jobs, harnessing American ingenuity, and building a brighter, more sustainable future.

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