Biden Admin Announces Tax Hikes on Oil and Gas Leases

With gas prices averaging $4.08 across the U.S., the Biden administration announced late Friday that it would increase taxes on oil and gas drilling on federal lands as part of its plan to resume lease sales.

The Interior Department announced in a press release that it will hike royalty rates charged to oil and gas companies operating on federal land to 18.75 percent, a near 50 percent tax increase from the current rate of 12.5 percent. This royalty rate hike will increase the cost of energy production on federal lands, cost increases that will be passed on to consumers in the form of higher gas prices and energy bills.

Biden’s tax hikes are accompanied by a significant reduction in the amount of federal land available for oil and gas development. The Interior Department’s plan will only allow 144,000 acres to be available for oil and gas production, a near 80 percent reduction in the amount of land originally analyzed by DOI for inclusion.

President Biden enacted a federal ban on new oil and gas leases during his first week in office, a move that was initially described as a 60 day pause. Yet after more than one year in office, the Biden administration has failed to conduct a single new lease sale.

In June of 2021, a federal judge reversed Biden’s Executive Order with a nationwide injunction ordering the Department of Interior to resume lease sales. Now the Biden Administration will finally comply with the court order but will do so while increasing taxes on leases and greatly limiting the ammount of land available for development.

With Americans facing record high gas prices, the Biden Administration should be encouraging American energy production by reducing taxes and regulatory burdens while expanding production on federal lands. Instead, the Administration did the bare minimum to comply with a court order to resume lease sales and attached new tax increases and land restrictions designed to limit new production.