The Obama administration announced it is cancelling legally required oil and gas lease sales in California for at least the rest of the year. Bureau of Land Management officials ironically blamed the “sequester” reduction of future budget increases for cancelling the lease sales, even though the lease sales generate tremendous federal revenue.
Funds Allocated Elsewhere
The Bureau of Land Management (BLM) announced it had cancelled lease sales previously scheduled for May, June, and September 2013. The previous two lease sales brought in approximately $1 million in federal revenue.
“We’ve got limited staff and tight budgets, so something’s got to give. If we put the resources into offering a new lease, then we’ll have to cut back on our enforcement and inspection,” argued BLM spokesman David Christy, according to the Washington Times.
Decision Violates Federal Law
BLM conceded its action violated the Mineral Leasing Act of 1920, which requires BLM to conduct four lease sales in California each year. BLM nevertheless claimed it had little choice but to ignore the law after the sequester.
BLM has not cut back on renewable energy programs on federal lands in California, even though they do not generate the revenue of oil and gas lease sales. Also, federal law does not require BLM to continue pursuing renewable energy programs in California.
California Economy Will Suffer
BLM California deputy state director of external affairs Doran Sanchez acknowledged to Environment & Climate News the cancelled lease sales will cost California residents jobs and economic growth.
“The BLM leases parcels. Companies who purchase the leases create the jobs and economic benefit when they explore and find a deposit and develop the resource,” he said. Sanchez acknowledged cancelling the lease sales will cost BLM and the federal government revenue.
“We will revisit our decision in October, the beginning of new Fiscal Year, and based upon funding, staffing, etc., how we may proceed regarding future lease sales,” Sanchez said.
American Petroleum Institute chief economist John Felmy says the Obama administration is using the sequester as an excuse to shut down oil and gas production precisely where there is the most potential for resource production, job creation, and federal income.
“We now know that California holds a vast amount of oil and natural gas resources, especially in the Monterey Shale located in the central part of the state. Some estimate that this play could account for as much as two-thirds of all of the nation’s shale oil,” Felmy said in a conference call.
Felmy cited a study by the University of South California and the Communications Institute showing oil production in the Monterey Shale formation could create 500,000 jobs in two years and 2.8 million jobs by the end of the decade. The study also projects Monterey Shale oil production could generate $4.5 billion in government revenue in two years and $24.6 billion by 2020.
“For now, that’s not to be. Thanks to shortsighted political games in Washington, DC, Californians will have to wait,” Felmy said.
Alyssa Carducci ([email protected]) writes from Tampa, Florida.