Posted on: 09. 30. 22
Inflation has been impacting us all. No one is enjoying the latest hikes in our national economy from oil and gas production and movement to general prices at the pump. Last month congress made some serious moves to remedy inflation taxes that are hurting Americans’ budgets.
The Inflation Reduction Act of 2022 is one of the biggest congressional moves from the Biden administration. However, while we love the idea of the average person saving money, we have to ask just how this new law will impact how the oil and gas industry operates in the long term.
What is the Inflaction Reduction Act?
The Inflation Reduction Act of 2022 is a new act that aims to tackle inflation and reduce national debt. U.S. Senator Joe Manchin (D-WV) states that the act “will increase domestic energy production, lower energy and healthcare costs, and pay down our national debt without raising costs for working Americans.”
Manchin went on to state the act will lower gas prices, energy prices, and bolster energy security.
How Does it Influence Action for the Climate?
So, what does all of this saving have to do with the climate crisis? Let’s get into the deeper details.
According to an article from Financial Times, the climate law contains several aspects that will reward clean energy investment and reduce overall methane emissions from oil and gas companies and development sites over time
Will the Oil and Gas Industry Have to Pay Up?
In short, for many major production companies, yes. The landmark climate law presents the first time ever that a fee is charged for methane leaks from the oil and gas sector.
According to the Act itself, the law will present charges of $900 per tonne of methane to companies that emit it from pipelines, wells, facilities, and liquefied gas terminals.
This law will be in effect starting in 2024.
However, two years later, the fees plan to increase to $1,500 a tonne.
The goal is to reduce methane emissions by 30 percent at the end of the decade, and bring in national revenue that totals around 6 billion dollars.
If this plan has your facility sweating, the truth is that it will only impact roughly 40 percent of the industry. The other 60 percent, or, sites that produce methane less than 25,000 tons of the equivalent to CO2 per year, are exempt from the fee.
Benefits to Oil and Gas with Climate Bill
It’s easy to see this move as the government stepping in to once again tighten its grip on our industry. However, there are still some benefits our industry can experience, as at the end of the day, the Act also has several provisions that reflect well for oil and gas.
The bill actually rolls back some of President Biden’s former shutdowns of leasing opportunities. It contains a provision for oil and gas offshore leases that allow for more drilling activities in the Gulf of Mexico. As our industry has already begun to take an environmentally-friendlier approach to practices, this is a great opportunity for invested companies to experiment with and expand their clean initiatives.
We predict this could help leaders of our industry find solutions to producing necessary oil and gas products with renewables as a partnership rather than a threat to our industry’s livelihood.
Oil and Gas News by Pro-Gas Services
If you’re like us, you’re interested in what the next few years have in store for oil and gas. Don’t worry! Pro-Gas Services, LLC is on the case. We provide our clients with the latest oil and gas services and technologies and keep everyone in the loop with upcoming news developments that impact our industry.
To learn more about our facility management services, gas conditioners and other products we offer, contact us! We’re ready to help your site get with the latest industry initiatives.
