Democrats move to hike federal oil and gas royalties

Source: By James Osborne, Houston Chroncile • Posted: Monday, September 6, 2021

The Royal Dutch Shell Plc Convent Refinery ahead of Hurricane Ida in Convent Louisiana, U.S., on Saturday, Aug. 28, 2021. Hurricane Ida is growing in size and power as it moves north across the Gulf of Mexico toward Louisiana, and New Orleans is bracing for disaster -- clearing out hospital wards, shutting down oil refineries and forcing residents of low-lying neighborhoods to flee. Photographer: Luke Sharrett/Bloomberg
The Royal Dutch Shell Plc Convent Refinery ahead of Hurricane Ida in Convent Louisiana, U.S., on Saturday, Aug. 28, 2021. Hurricane Ida is growing in size and power as it moves north across the Gulf of Mexico toward Louisiana, and New Orleans is bracing for disaster — clearing out hospital wards, shutting down oil refineries and forcing residents of low-lying neighborhoods to flee. Photographer: Luke Sharrett/Bloomberg

WASHINGTON — House Democrats moved ahead Thursday on raising royalty rates and other fees for oil and gas drilled on federal lands and waters, as they seek to fund projects protecting coastal areas from rising sea levels and flooding caused by climate change.

Under the Democrats’ reconciliation bill, which they can pass on a straight party-line vote, the onshore and offshore royalty rate would increase from 12.5 percent to 20 percent.

At a hearing in the House Natural Resources Committee Thursday, chairman Raúl Grijalva, D-Ariz., said the increase would raise billions of dollars to help fund projects including a Civilian Climate Corps that would hire young people to work on projects battling climate change and protecting public lands.

“Today we have a once-in-a-generation opportunity to advance a bold ambitious investment in the United States,” he said. “The president has asked us to draft a spending framework that will confront the damage being done by climate change and put the country on a sustainable path that will create millions of jobs.”

The United States collects $4.2 billion a year in royalties and fees from oil and gas companies producing on federal lands and waters.

With that figure set to increase significantly, industry lobbyists attacked the spending bill as likely to make offshore drilling in the Gulf of Mexico less attractive, pushing companies to fields overseas.

“Louisianans are in the earliest stages of sorting through the aftermath of Hurricane Ida and now have to worry about the possibility of a federal budget that attacks their economy and jobs,” said Erik Milito, president of the trade group National Ocean Industries Association. “The practical and obvious consequences of more restrictive and less competitive terms for offshore oil and gas leasing and production include the exporting of American jobs and energy production to foreign countries like Russia and China.”

Citing the hundreds of thousands of people along the Gulf Coast without power and the chaos in Afghanistan after the pullout of U.S. troops, Republicans urged Grijalva to postpone Thursday’s hearing so they could focus on those matters.

Girjalva pressed ahead, leaving Republicans to argue against a spending bill they appear to have little power to stop.

“At best this package is an example of partisan overreach,” said Rep Bruce Westerman, R-Ark. “At worst it is a means to hamstring the economy, cripple American energy production and make the U.S. dependent on foreign adversaries.”

 

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