President Joe Biden is urging Congress to add a “use it or lose it” policy to federal oil and gas leases to spur production, but the policy would have a small effect in Pennsylvania.
The policy is in response to high gas prices sparked by the Russian invasion of Ukraine.
“The first part of the president’s plan is to immediately increase supply by doing everything we can to encourage domestic production now,” according to a White House Fact Sheet.
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“The oil and gas industry is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production,” the White House noted. “President Biden is calling on Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.”
Pennsylvania will most likely see little change in production if federal policy included non-use fees for a simple reason: The federal government doesn’t own much land in Pennsylvania and most oil and gas wells with leases are on private and state property.
In FY2021, Pennsylvania had only 4,688 producing acres of federal land, and that has been relatively constant since 2001, according to data from the Bureau of Land Management. Most federally owned landis out West; Pennsylvania only has a large patch of federally owned land in the northwest, the Allegheny National Forest.
The majority of federal oil and gas leases are out West. In FY2021, the federal government offered 1.4 million acres for leasing – 1 million acres in Alaska, 276,000 acres in Wyoming, and only 1,494 acres in the eastern states.
The federal government doesn’t own much land in Pennsylvania and most oil and gas wells with leases are on private and state property.
For Pennsylvania oil and gas, power resides in the state General Assembly, not Congress.
The Commonwealth’s Department of Environmental Protection has made a similar argument as the Biden administration, but has not called for a similar non-use fee. In a March hearing with the Senate Appropriations Committee, DEP noted that only one-third of the state land that has oil and gas leases is developed.
However, high prices now do not guarantee price drops won’t happen in the future. Oil and gas companies can be “gun shy,” as Bloomberg reported, about expanding production because a drop in the price of oil and gas could make those investments into an economic loss, rather than a profit.
Anthony Hennen is a reporter for The Center Square. Previously, he worked for Philadelphia Weekly and the James G. Martin Center for Academic Renewal. He is managing editor of Expatalachians, a journalism project focused on the Appalachian region.
This article was republished with permission from The Center Square.