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The Energy 202: Trump's offshore drilling proposal has a cost besides potential oil spills


with Paulina Firozi


The Trump administration’s effort to open almost all of the U.S. outer continental shelf to drilling has rattled coastal communities fearful of oil-drenched beaches like those they saw after the Deepwater Horizon disaster. 

There’s another cost, though, of high-volume offshore oil and natural gas leasing borne by the public, even if nothing is spilled. A new analysis Thursday says that the federal government — and therefore U.S. taxpayers —  isn't getting its money’s worth from oil and gas companies pumping publicly owned fossil fuels from the seabed in the Gulf of Mexico.

By law, the government is supposed to get “fair market value” for leasing offshore tracts of oil and gas. But the Project on Government Oversight (POGO), a government watchdog group, found that companies rarely compete for leases.

As a result, the federal government got less than 3 percent per acre in its most recent lease sales, in August of last year, than it did before 1983, a new POGO analysis found. The findings suggest that for years the government has gotten short-changed when it comes to oil and gas lease sales. As the Trump administration tries to expand offshore drilling, the problem may only get worse.

Here’s the rub: That marked decline isn’t really the result because of President Trump's policies. It stems all the way back to the Reagan administration. 

Before 1983, companies nominated and the government put up for auction patches of offshore area, leaving a limited pool of available sections of ocean to lease. But a Reagan-era change, kept by the five subsequent administrations, opened a wide swath of sea to oil and gas leasing in each auction. 

The result: The vast majority — 76.6 percent — of leases awarded had only one bid, according to POGO. Because of that lack of competition, “the average price paid per acre in each Gulf of Mexico auction has declined by 95.7 percent, from $9,068 to $391” when comparing leasing in the approximately three decades before and after 1983, POGO found.

Consequently, government revenue from lease sales fell:

That 35-year-old decision matters today because the Trump administration is accelerating the sale of oil and gas leases under a system that may not be able to secure the most bang for its buck.

That’s especially true at a time of relatively low oil prices. 

The latest Interior Department auction in August of last year, during which “all available unleased areas in federal waters of the Gulf of Mexico” were put on the block, bear that out: The federal government got only $235 per acre, or $156 less than the 35-year average.

At the time, oil was trading below $50 per barrel.

At least one government auditor, the Congressional Budget Office, generally concurs with POGO’s findings. Returning to the tract nomination system would raise federal income by $150 million over 10 years, the CBO found in 2016.

Since Trump took office, Rep. Raúl M. Grijalva of Arizona, the top Democrat on the House Natural Resources Committee,has expressed interest in the old, potentially more profitable leasing system. Last October, Grijalva asked the Government Accountability Office to report on the pros and cons of returning to the pre-1983 method of auctioning.


— Pruitt’s pricey travel: Ire over Environmental Protection Agency chief Scott Pruitt's taxpayer-funded first-class travel took on bipartisan spark Wednesday when House Oversight Committee Chairman Rep. Trey Gowdy (R-S.C.) demanded Pruitt turn over documents related to his flights. “Clearly, federal regulations prohibit a blanket waiver to fly first class except to accommodate disabilities or special needs,” Gowdy, of Benghazi investigation fame, wrote in a letter to Pruitt.

— Industry-funded study withdrawn: The president of Tennessee Technological University is disavowing an academic study that was used to justify the repeal of tighter federal emissions standards for freight trucks, The Post’s Juliet Eilperin and Brady Dennis report. “In a letter Monday to [Pruitt] and Rep. Diane Black (R-Tenn.), who initially received the study results, [president Philip B. Oldham] wrote that ‘knowledgeable experts within the University have questioned the methodology and accuracy of the report’ on the trucks’ performance,” they report. The school is investigating an allegation of research misconduct.

— Zinke’s Sunshine State burn: Zinke met with California Gov. Jerry Brown (D) on Tuesday, and vowed to listen to the state’s objections to the administration’s plans for offshore oil and gas drilling. Zinke “made it clear that California's views will be taken into account," Brown's press secretary Evan Westrup said, according to the Sacramento Bee. The meeting follows an exception Zinke granted to Florida from the federal government's new offshore oil and gas drilling proposal.

— "This is simply a matter of them wanting to control information:" Two top U.S. Geological Survey officials have left their roles after Zinke demanded confidential data on the National Petroleum Reserve-Alaska before it was released to the general public. The former officials charge “the request violated the USGS’s scientific integrity policy because such commercially valuable data should not be shared in advance,” The Post’s Juliet Eilperin reports. An Interior spokeswoman justified the decision by saying Zinke and his deputy are allowed to “review data, draft reports, or other information as it deems necessary” under the department’s 1950 reorganization plan.

— ANWR drilling ahead: Sen. Lisa Murkowski (R-Alaska) said this week Interior is moving quickly to lease land for oil and gas drilling in the Arctic National Wildlife Refuge before the end of Trump’s first term. "The push right now within Interior is to [issue leases] before four years," Murkowski said during an address to a business group in Anchorage, E&E News reports. "They are working fairly and aggressively to put in place, to lay the groundwork for what comes next ... because once you get those leases out into the hands of those who can then move forward, it's tougher to throw the roadblocks in place."

— Not a gas tax, exactly: The White House signaled on Wednesday it was open to a different type of experimental transportation tax, currently being used in Oregon, as a way to raise revenue for Trump’s proposed infrastructure program. In the annual "Economic Report of the President," the White House praised the Oregon tax where “volunteers are charged a fee of 1.7 cents for each mile driven on state road" in exchange for rebates for state fuel taxes, Reuters reports. Kevin Hassett, chairman of the White House Council of Economic Advisers, said the administration was still examining “pluses and minuses” of different ideas to fund  its infrastructure plan.

— Nuclear reactors could run as long as 80 years under Trump plan: The Energy Department is preparing to support a request from utilities to extend licenses for nuclear power reactors, keeping some operating for as long as 80 years, Bloomberg News reports. A department official says the agency is conducting research and working with utilities, such as Exelon, Dominion Energy and NextEra Energy, to nab permission from the Nuclear Regulatory Commission to grant such extensions. Lobbying groups say extensions would lead to savings on the cost of new plants, while critics worry about potential risks because of decades of wear-and-tear.

— "[E]xactly the kind of mismanagement and tax dollar abuse I have been concerned about:" A new report from the Interior Department’s inspector general found a top Fish and Wildlife Service official under President Obama "violated federal laws and regulations" by participating in approving grants that financially benefited a "family member," E&E News reported. Zinke reacted pointedly to the report: This Inspector General report identified exactly the kind of mismanagement and tax dollar abuse I have been concerned about and I am looking to root out at Interior," he said in a statement.

Pending Va. law will affect utility bills for a decade. Here’s what you need to know. (Gregory S. Schneider)

Man who died in Yellowstone fall was hunting for treasure millionaire says he buried (Derek Hawkins)


— Drought prep: The Bureau of Reclamation this week told some California farmers who get water from the federal Central Valley Project they would receive just 20 percent of the request for water allocation this year, a result of "the abysmal precipitation California has received so far this winter," the Sacramento Bee reports. Conditions in the state are not as troubling as in California’s recent years, officials said the announcement is precautionary and water allocations could increase.

— The case for flamingos in Florida: A new paper published Wednesday makes the case that flamingos are native to Florida and may be endangered, the New York Times reports. That matters because as of now the state says the birds are not native, but instead escapees from captive populations. “You would think for as conspicuous a bird as the pink flamingo, we would know some basics, but we just have a lot of questions,” Steven Whitfield, a conservation biologist and author of the new paper, told the Times.

— Man, it’s a hot one: The Arctic experienced temperatures more than 45 degrees above normal on Wednesday, as areas along the East Coast saw record February warmth. “This latest huge temperature spike in the Arctic is another striking indicator of its rapidly transforming climate,” The Post's Jason Samenow writes. “Temperatures over the entire Arctic north of 80 degrees latitude have averaged about 10 degrees (6 Celsius) above normal since the beginning of the calendar year, sometimes spiking over 25 degrees  (14 Celsius) above normal (the normal temperature is around minus-22, or minus-30 Celsius).”

Here's how Robert Rohde, a physicist at the University of California at Berkeley, reacted:

Meanwhile, for a second straight day, there were record-setting temperatures in Washington, which reached 81 degrees on Wednesday.

New Jersey joins coalition backing Paris climate change deal (Washington Examiner)


— Nuclear inspections allegedly faked at Southern's nuclear power plant: "The U.S. Nuclear Regulatory Commission said Wednesday it’s fining Southern Co. for faking inspections" at a nuclear power plant in Georgia, Bloomberg News reports. The allegations matter now more than ever as Southern tries to lock down federal money to build two new reactors there.

Judge orders government review of Keystone pipeline documents (Associated Press)



  • The Environmental and Energy Study Institute and the National Association of Regional Councils hold a briefing on climate and weather risks to America’s coastal communities.

Coming Up

  • The House Natural Resources Subcommittee on Energy and Mineral Resources will hold an oversight hearing on LNG and geopolitical implications on Feb. 27. 
This footage is the first to show a newborn dumbo octopus. The video was filmed by Woods Hole Oceanographic Institution ecologist Tim Shank on Aug. 31, 2005. (Video: Tim Shank (WHOI) and NOAA's Office of Exploration and Research)

— First-ever footage: The above video shows a newborn dumbo octopus seen for the first time. Read more from The Post's Sarah Kaplan