The Morning Dispatch: Biden Splits the Baby on New Oil and Gas Leases

Happy Tuesday! Yesterday was a big day for fans of Kendrick Lamar, Marvel’s Thor franchise, and Taco Bell’s Mexican Pizza. All three are making their triumphant return in the next few weeks!

Quick Hits: Today’s Top Stories

• President Volodymyr Zelensky said yesterday that Russian forces have begun their offensive in Ukraine’s eastern Donbas region, signaling the start of a new phase in the war. Russian and Ukrainian forces have been fighting in the Donbas region for the better part of eight years, but a Pentagon official told reporters yesterday “almost all” of Russia’s airstrikes and artillery activity are now concentrated along Ukraine’s eastern front, from Kharkiv in the north to Mariupol in the south. One exception is the western city of Lviv, where a Russian airstrike on Monday reportedly killed seven people and wounded 11 others.

• Israel’s Iron Dome air defense system intercepted a rocket fired from the Gaza Strip on Monday, two days after Israeli police clashed with Palestinians at a holy site in Jerusalem important to both Muslims and Jews. It was the first such rocket attack in more than four months, and the Israeli Defense Force said it responded by destroying a Hamas weapons manufacturing facility in southern Gaza. Israeli Prime Minister Naftali Bennett’s government is teetering on the brink of collapse, with the Islamist Ra’am Party temporarily freezing its membership in the deadlocked Knesset and governing coalition over the tensions.

• The Transportation Security Administration (TSA) will stop enforcing the Biden administration’s federal mask mandate for airplanes and public transportation after U.S. District Judge Kathryn Kimball Mizelle ruled on Monday the policy “exceeds the CDC’s statutory authority and violates the procedures required for agency rulemaking.” Following the decision, all major U.S. airlines—including American, United, Delta, Southwest, JetBlue, and Alaska—announced they would no longer require travelers or crew members to wear a mask while flying.

• Vice President Kamala Harris announced Monday the United States will implement a self-imposed ban on conducting direct-ascent anti-satellite missile testing, and called on other countries to do the same. The Biden administration criticized Russia for carrying out such a test in November, arguing the space debris it created presents a threat to other satellites. 

• More than 440 people are dead—and dozens more missing—after the heaviest rain South Africa’s seen in decades triggered widespread flooding and mudslides in the country’s KwaZulu-Natal (KZN) province over the weekend. The South African government has activated 10,000 troops to restore power and water, distribute aid, and provide medical support. 

Biden Announces New Drilling Leases, Pleasing No One

With Good Friday, Passover, Ramadan, and Coachella all taking place last week, you could be forgiven for not noticing the Biden administration’s decision to break a campaign promise and resume offering some new oil and gas drilling leases on public land. But oil companies and climate activists noticed, and neither were pleased.

During his first week in office, President Joe Biden ordered the Secretary of Interior to “pause” new oil and natural gas leases on public lands. But after several states sued the administration, U.S. District Judge Terry Doughty of Louisiana put that moratorium on hold in June 2021, ruling that the states had demonstrated a threat of “irreparable injury” stemming from the order and that congressional approval was required to implement said “pause.” 

The administration auctioned off a record 1.7 million acres of offshore oil and gas leases in the Gulf of Mexico in November to comply with the decision, but the sale was invalidated a few months later by a separate ruling from Judge Rudolph Contreras, who argued the auction rested on a flawed environmental analysis conducted during the Trump administration. “We have documented serious deficiencies in the federal oil and gas program,” an Interior Department spokeswoman said at the time. “Especially in the face of the climate crisis, we need to take the time to make significant and long overdue programmatic reforms.”

But the White House’s tone on energy production has shifted dramatically in the months since. Gas prices have been steadily rising for more than a year, but they spiked in late February and early March following Russia’s invasion of Ukraine, sending the administration hat in hand to oil companies and OPEC, pleading with—and threatening—them to increase production. OPEC has largely ignored these entreaties, so the White House has resorted to other marginal cost-cutting ideas like releasing up to 180 million barrels from the Strategic Petroleum Reserve and temporarily allowing higher ethanol content in gas. But oil and gas producers have been calling for more drilling leases and permits to be made available.

The Department of the Interior oversees 700 million acres of federal land, and about 26 million were leased for drilling as of 2018. This newly announced sale will include about 144,000 acres, 80 percent fewer than oil and gas companies wanted. The exact locations of those acres haven’t been disclosed yet, but Interior officials said they chose the land parcels up for lease in consultation with tribal authorities and other residents. The Department is also raising the royalty fee drillers will need to pay on their yield from 12.5 percent—the statutory minimum—to 18.75 percent, the first increase since the royalty was first imposed in the 1920s.

“For too long, the federal oil and gas leasing programs have prioritized the wants of extractive industries above local communities, the natural environment, the impact on our air and water, the needs of Tribal Nations, and, moreover, other uses of our shared public lands,” Interior Secretary Deb Haaland said. “Today, we begin to reset how and what we consider to be the highest and best use of Americans’ resources for the benefit of all current and future generations.”

The Biden administration was clearly trying to satisfy two different groups of stakeholders with the announcement—oil lobbyists and climate activists—but neither came away content.

“This administration has begged for more oil from foreign nations, blames American energy producers for price gouging and sitting on leases,” C. Jeffrey Eshelman, chief operating officer at the Independent Petroleum Association of America, said. “Now, on a late holiday announcement, under pressure, it announces a lease sale with major royalty increases that will add uncertainty to drilling plans for years.”

The royalty increase could also backfire, according to Benjamin Zycher, a senior fellow of energy and environmental policy at the American Enterprise Institute. With a bigger cut taken from their eventual profits, companies will be willing to pay less upfront, making the government’s returns rely less on lease terms and more on unpredictable yields. “Raising the royalty rate and implicitly, therefore, reducing the initial bids has the effect of increasing the riskiness of the revenue stream for the taxpayers,” Zycher told The Dispatch. “The idea that this is going to systematically increase returns to the federal government is just kind of silly.”

Climate activists, meanwhile, cried foul against the administration for resuming lease sales at all. “This is pure climate denial,” said Jeremy Nichols, climate and energy program director at environmental group WildEarth Guardians. “While the Biden administration talks a good talk on climate action, the reality is, they’re in bed with the oil and gas industry.”

“They say that the art of compromise is leaving everybody unhappy,” Kevin Book, a senior associate of energy and climate at the Center for Strategic and International Studies, told The Dispatch. “This meets that test.”

Drilling on federal land accounts for less than 10 percent of all oil and gas produced in the U.S., so changes to federal lease terms aren’t as significant as state regulations. “The federal government—and the presidency—is kind of a third-tier player in the oil and gas industry,” Jim Krane, energy research fellow at Rice University’s Baker Institute, told The Dispatch, adding that the oil and gas from these new leases won’t arrive in time to ease the short-term price crunch. “This is probably going to help us with the next price spike,” Krane said. “It’s probably not going to help us much with the current one.”

The oil won’t arrive overnight, but Book pointed out that if this batch of leases includes acreage in especially profitable locations—high-yield areas of New Mexico and Wyoming, for instance, or areas contiguous with existing drilling infrastructure—it could bring down prices by raising the market’s expectation of upcoming oil and gas yields. The Department of the Interior did say the new land release “focuses leasing on parcels near existing development and infrastructure,” primarily for environmental reasons, as doing so reduces the amount of entirely new development and habitat destruction.

With the administration’s climate goals mostly stalled in Congress, this lease announcement looks like an effort to balance the long-term environmental aim of reducing oil and gas consumption with the reality that nearly 70 percent of U.S. energy currently comes from those two sources—and Russia’s invasion of Ukraine has only tightened their market. “We’ve got this energy transition push due to climate change that is basically fighting with our short-term energy needs,” Krane said. “It’s pretty clear that our current energy system needs to be healthy and strong and fully operable, even as we’re beginning to phase it out and move to new, cleaner forms of energy.”

Can Donald Trump Make J.D. Vance a Senator?

Late last week, former President Donald Trump broke his silence on Ohio’s hotly contested Republican U.S. Senate primary, deciding to throw his weight behind author and venture capitalist J.D. Vance. The man behind Hillbilly Elegy, Trump argued, is Republicans’ best chance to defeat likely Democratic nominee, Rep. Tim Ryan, adding that Vance “gets it” now after having said “some not so great things” about the former president in the past.

Harvest has been in Ohio for much of the past week, and, in a piece for the site today, details how Trump’s endorsement is reverberating around the Buckeye State.

Jane Timken—who has the backing of retiring Sen. Rob Portman—expressed confidence ahead of Trump’s decision.

“Look,” she told The Dispatch, “I’m the only candidate that President Trump’s endorsed before”—a reference to Trump’s endorsement of her when she ran for chair of the state’s party. 

Twenty-four hours later, that was no longer the case.

On Friday, Trump’s team issued a statement sealing the deal: “In the Great State of Ohio, the candidate most qualified and ready to win in November is J.D. Vance. We cannot play games. It is all about winning!”

He added that it had been a tough choice: “This is not an easy endorsement for me to make because I like and respect some of the other candidates in the race—they’ve said great things about ‘Trump’ and, like me, they love Ohio and love our country.”

Vance has transformed himself from a mainstream media darling into a populist firebrand, picking up several key backers along the way. But not everyone is convinced.

Many Trump allies, including Fox News host Tucker Carlson, Missouri Sen. Josh Hawley, billionaire entrepreneur Peter Thiel, and Donald Trump Jr., had all encouraged Trump to endorse Vance.

Some local Republicans, though, tried to ward an endorsement off: 42 local GOP leaders signed a letter urging Trump not to endorse Vance.

“While we were working hard in Ohio to support you and Make America Great Again, JD Vance was actively working against your candidacy,” the letter, obtained by Politico, reads. It also included a list of anti-Trump comments Vance had made in the past.

Vance had previously referred to himself as “Never Trump,” called the former president an “idiot” and an “opioid” who was “leading the white working class to a very dark place.” He supported Never Trump candidate Evan McMullin in 2016.

“Like some others,” Trump said in his endorsement, “J.D. Vance may have said some not so great things about me in the past, but he gets it now, and I have seen that in spades.”

Vance has been climbing in the polls ahead of Ohio’s May 3 primary, but his victory is far from guaranteed. He’s leaning hard into Trump’s endorsement in the hopes it will put him over the top.

Vance unveiled a new advertisement highlighting Trump’s pick and trumpeted the news on Twitter: “I’m incredibly honored to have President Trump’s support. He was an incredible fighter for hard working Americans in the White House, he will be again, and I’ll fight for the America First Agenda in the Senate.”

Vance is also promoting a town hall in Cleveland Wednesday that Donald Trump Jr. will headline alongside him. The former president, meanwhile, is scheduled to descend on the Buckeye State for a Saturday rally in Delaware, Ohio, on behalf of Max Miller, who is running for a seat in the U.S. House.

It’s unclear whether the endorsement will be what Vance needs to get across the finish line, but he seems to be betting it will move voters in his favor. A visit to Vance’s Twitter page shows he has updated his banner image to feature the two words: “Trump Endorsed.”

Worth Your Time

• In a piece for City Journal, Chris Pope posits a theory on why former House Speaker Paul Ryan’s entitlement reform push—while necessary—failed to gain traction. “The problem with Paul Ryan’s vision was that it involved a misunderstanding about who bears the cost of bloating entitlements—and this misunderstanding led the GOP astray,” he argues. “The costliest and most over-extended entitlements are funded mostly through payroll taxes, to which poorer Americans pay a higher proportion of their incomes. To pledge reductions in entitlement spending while ignoring the burden of payroll taxes supporting those ever-swelling benefits is to contemplate only political pain and ignore potential gain. … Voters might be inclined to support increases to the retirement age if they get lower payroll taxes in return. Otherwise, they’ll pass.”

• With all that’s going on in the world, it’s easy to let the war in Ukraine—now in its 54th day—fade into the background. But we shouldn’t. “The news rushes by, and, if you’re like me, you glance at headlines, only occasionally reading an article through. You get the gist. There are only so many hours in a day. And when it comes to Ukraine, what is there to know? Bombardment, murder, displacement, horror. It all blends together. You may get a little numb,” Jay Nordlinger writes in a quick post for National Review. “In Mariupol, the Ukrainians are taking a heroic stand. Are the rest of us capable of being moved?”

Presented Without Comment

Toeing the Company Line

• It’s Tuesday, which means Dispatch Live is back tonight! Tune in at 8 p.m. ET/5 p.m. PT for this week’s episode, which will focus on the latest news out of Ukraine. What will the next few weeks in the Donbas look like? Does the sinking of the Moskva matter? Can Ukraine actually hold out? Steve, Jonah, and Klon will discuss all that and more.

• On today’s episode of Advisory Opinions, David and Sarah discuss the death penalty and a pronoun case before shifting gears to a deeper conversation about change and human nature. Why aren’t we the same people we were 10 years ago?

Let Us Know

On this day in 1775, an unknown soldier fired off the “shot heard ‘round the world” in Lexington, Massachusetts, and the Revolutionary War was underway. 

If you were living at that time, do you think your personality would have rendered you a Patriot or a Loyalist? What, if anything, would convince you to join an armed rebellion against the government today?