During last night’s debate, the candidates sparred over where most of the increases in domestic oil and natural gas production are coming from. While domestic energy production has increased during President Obama’s first term, Republican challenger Mitt Romney noted that the increases have come on private lands, not federal leases. What followed was one of the more contentious “did-not, did-too” moments of the debate:
Romney: In the last four years, you’ve cut permits and licenses on federal lands and waters in half.”
Obama: It’s not true, Gov. Romney.
Romney: So how much did you cut them by?
Obama: It’s not true.
Romney: How much did you cut them by, then?
Obama: Governor, we have actually produced more oil –
Romney: INo, no, how much did you cut licenses and permits on federal lands and federal waters?
Obama: Governor, here’s what we did. There were a whole bunch of oil companies –
Romney: I had a question and the question was how much did you cut them by? How much did you cut them by?
Obama: You want me to answer. I’m happy to answer the question. Here’s what happened. You had a bunch of oil companies who had leases on public lands that they weren’t using. So what we said was you can’t just sit on this for 10, 20, 30 years, decide when you want to drill, when you want to produce, when it is most profitable for you. These are public lands. If you want to drill on public lands, you use it or you lose it. So what we did is take away those leases and are now reletting them.”
Romney: Production on government land of oil is down 14 percent and production of gas is down 9 percent. We have not produced more oil and gas on federal lands and federal waters. And coal production is not up. Coal jobs are not up.”
Obama’s “use it or lose it policy” has always been more political show than effective policy. Most companies lease federal lands for 10 years or less, and leasing land doesn’t mean there’s oil or gas there that can be economically produced.
A company leases the land because it believes it can produce oil or gas there in commercial quantities. There aren’t any guarantees. The lease, though, is a contract, so it really is up to the companies to decide, within the term of the lease, when it wants to drill. And its in companies’ best interests to drill when it would be most profitable for them. In the meantime, they’re still paying rent on the land and adhering to the terms of their contract.