Potential Attempt to Boost Stock Price Without Easing Gas Prices on Struggling Families
New Legislation Forces More Reporting from Big Oil about Energy Exploration Plans
Washington - New legislation will force oil companies to report specific plans on how they plan to use millions of federal acres already under lease for energy exploration and innovation, U.S. Senators Robert Menendez (D-NJ) and Bill Nelson (D-FL) said today.
Under current law, oil companies can lease possible oil reserves on Federal land regardless of whether they are producing oil on that land or even have plans to produce oil there. In some cases, oil companies are leasing - but failing to develop - federal land in order to book more reserves on their balance sheet and inflate their stock price. In others, oil companies are attempting to prevent competitors from producing on those acres.
However, the failure of oil companies to produce on land is clear: Out of 41 million acres of federal onshore lands that are currently under lease, the industry has only 12 million acres producing; Offshore there are a total of 38 million acres under lease but the industry is producing on only 6.5 million acres. That means that less than 25% of the acres leased on federal lands and water are actually producing.
The "Use it or Lose it" legislation would require companies to report if, when and how they intend to actually develop federal land as well as report their investments in oil development. By requiring clear development plans and imposing a modest fee for acres not in production the aim is to spur production.
KEY COMPONENTS OF THE "USE IT OR LOSE IT" LEGISLATION
• Mandates that oil companies submit plans to diligently develop Federal land and water leased by oil companies
• Levies an extra 4 dollar fee per year on acres of federal land or water that go unused
• Applies only to new leases and would raise approximately $874 million over ten years
Senator Menendez said, "New Jersey families and businesses are getting slammed by gas prices while oil companies twiddle their thumbs. Doing nothing isn't an option for families and small businesses, and it isn't an option for me. We're going to get answers for why oil companies are not investing in new production. Government will begin holding oil companies accountable, not holding their hands."