Energy Companies Are Not Sitting on "Inactive" Oil Leases, President Obama | Robert L. Bradley Jr. | Cato Institute: Commentary

Energy Companies Are Not Sitting on "Inactive" Oil Leases, President Obama | Robert L. Bradley Jr. | Cato Institute: Commentary: "Obtaining a lease is just the first step in producing energy, after which companies must obtain exploration and drilling permits. Leases may appear idle — but only because planned exploration and development are being held up by other federal agencies, such as the Bureau of Ocean, Energy Management, Regulation and Enforcement.

Throughout the pre-leasing, leasing, exploration, drilling, and production processes, companies have to apply for more than 15 permits and comply with more than 90 sets of federal regulations. A permit just approved in Utah, for example, was four and half years in the making. In an earlier report on lease activity, this land would have been considered inactive.

The more the government stalls, the more oil and gas companies pay. Annual rental fees for leased land can now exceed $100,000 annually — and can increase as the lease goes on. This hardly suggests that companies are somehow incited to postpone drilling and production.

Not to worry, leases also include a "use it or lose it" provision to ensure that oil companies promptly return acreage unworthy of development to the government."