A federal court has rejected a plan to lease millions of acres in the Gulf of Mexico for offshore oil drilling, saying the Biden administration did not take into account the lease sale’s effect on planet-warming greenhouse gas emissions, violating federal law, The Associated Press reports.
The decision has no immediate impact on oil production, since developing new leases takes years. But the ruling raises concerns about “the potential impacts for the economy and environment of the Gulf region,” the Louisiana Mid-Continent Oil & Gas Association says.
“Any threats to energy development in the Gulf would mean that the nation’s energy supply will be met by foreign oil produced with lesser environmental standards,” says LMOGA President Tommy Faucheux in a prepared statement. “We need smart, sound transitional policies to successfully achieve our climate goals that reflect the reality that long term demand for reliable sources of energy will continue to grow.”
The decision sends the proposed lease sale back to the Interior Department to decide the next steps, which could include going forward with the sale after a revised review, scrapping it or taking other steps.
A spokesperson for Interior Secretary Deb Haaland says the agency is reviewing the decision, adding that Interior has “documented serious deficiencies in the federal oil and gas program.” The administration says it was “compelled to proceed with Lease Sale 257” following a court ruling in a lawsuit led by Louisiana Attorney General Jeff Landry.
“Judge [Rudolph] Contreras’ decision to ‘throw out’ the last lease sale is disappointing for industry, but even a bigger blow to the American consumer,” says Louisiana Oil & Gas Association President Mike Moncla in a prepared statement blaming the Biden administration for higher oil and gas prices.
While no one was going to immediately drill on any of the new leases, David Dismukes with the LSU Center for Energy Studies says he wouldn’t rule out the decision having an impact on oil prices.
“Prices often are a function of a lot of things, including expectations about the future,” he says.