Hours after taking office, President Joe Biden made good on a campaign promise to cancel the Keystone XL oil pipeline. Later that day his Interior Department mandated that only top agency leaders could approve new drilling permits over the next two months. Next week, according to people familiar with the plans, Biden will go even further: suspending the sale of oil and gas leases on federal land, where the U.S. gets 10% of its supplies. The actions sent oil producers’ stocks tumbling and raised blood pressure across the industry.
“In the first couple of days of the new administration, they are taking actions that will harm the economy and cost Americans their jobs,” said Frank Macchiarola, a senior vice president of policy for the American Petroleum Institute. “We’re concerned, and everyone in the country should be concerned.”
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The industry took it as a bad omen. Officials are worried that technical permitting decisions are being placed in the hands of political appointees, rather than expert regulators in the field. And they’re concerned permits — or simply changes to them — will be delayed for existing drilling operations.
Moreover, many interpreted it as a prelude to broader actions, including the administration’s plan to next week impose a moratorium on all oil, gas and coal leasing across some 700 million acres (2.8 million hectares) of federal land.
This “announcement is intended as a temporary ban on leasing and permitting but is also a precursor to a longer-term ban,” said Kathleen Sgamma, head of the Western Energy Alliance, which has threatened to go to court to battle any such blockade.
While Biden’s campaign promises – and his initial moves to fulfill them – are a threat to some U.S. oil producers, the actions could be a boon for crude prices by restraining supply.