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Manchin Proposing Increase Fees for Oil and Gas Drilling Over Federal Owned Lands and Waters

Manchin-led committee proposing increase over federal drilling fees (Photo CNBC)
Senator Joe Manchin  (D-W.Va.) is chairing a committee that is suggesting that costs for oil and gas drilling on federally controlled lands and waters be increased.

Senator Joe Manchin  (D-W.Va.) is chairing a committee that is suggesting that costs for oil and gas drilling on federally controlled lands and waters be increased.

Manchin-led committee proposing increase over federal drilling fees(Photo InsideClimateNews)

Senator Joe Manchin  (D-W.Va.) is chairing a committee that is suggesting that costs for oil and gas drilling on federally controlled lands and waters be increased.

Manchin Is Proposing a Fee Increase for Federal Drilling

The fee hike is one of several environmental provisions passed by House Democrats as part of the massive social spending and climate legislation currently being considered by the Senate, which Manchin and the Senate Energy and Natural Resources Committee, which is debating its portion of the bill, appear likely to keep. However, there are notable distinctions between the House proposal and the Senate’s consideration.

The Senate subcommittee is recommending a 16 and two-thirds percent increase in royalties paid for onshore oil and gas production, up from the existing rate of 12.5 percent. However, this figure is lower than the 18.75 percent rate in the House version. It also wants to raise royalty charges on offshore drilling from 12.5 percent to 14 percent. In addition, another feature that business despises is the bill’s removal of the government’s jurisdiction to cut royalty rates at the request of oil, gas, and coal companies.

Furthermore, even though royalty rates have not increased since 1920, fossil fuel groups have claimed that these hikes would be excessive and crippling to the oil and gas industry. Republicans, on the other hand, argue that the rises would result in increased fuel costs.

Fossil Fuel Industry Groups Asked Manchin to Reject his Proposed Increase

A coalition of fossil fuel industry groups directly confront Sen. Joe Manchin voted Wednesday against planned hikes in royalty rates for oil and gas leasing on federal lands, which might be a precursor to yet another climate component in the Democrats’ enormous social and climate spending package.

The letter, which was sent specifically to the West Virginia Democrat whose swing vote status may make or break the reconciliation bill’s prospects in the Senate, focused on a broader set of improvements to the federal oil and gas program contained in H.R. 5376, a $1.7 trillion bill passed by the House. Oil and gas drilling was prohibited in the Pacific, Atlantic, and Eastern Gulf, as well as the imposition of additional yearly pipeline costs.

Democrats and environmental organizations are expressing optimism that the royalty revisions, as well as the bill’s larger climate provisions, would pass Manchin’s and the Senate parliamentarian’s scrutiny this week.

Even still, if the bill’s debate drags on into the colder winter months, inflation and energy price concerns may continue to loom over legislators. Coal prices have risen to decade highs, while gas prices have just lately begun to fall from their 2014 highs.