A record sized US government sale of oil development leases in the Gulf of Mexico has elicited a lukewarm response from investors. So far, companies have bid on just 1 percent of the largest oil lease sale in American history, according to Reuters. The 77 million-acre sale, with discounted royalty rates in some areas, is part of the Trump administration’s efforts to increase fossil fuel production.

However, winning bids averaged only $135 per acre, a 35 percent decrease from last year, and much lower than figures from 2013 when oil prices were substantially higher. The auction earned a grand total of $124.76, just one tenth as much as was earned by a far smaller Central Gulf lease sale in 2013.

investors have been lured by favorable terms abroad, and discouraged by high costs to develop the acreage that would amount to billions of dollars.

Nonetheless, statements from the Interior Department Bureau of Ocean Energy Management put a positive spin on the results. The department’s spokesman Mike Celata said to reporters “I think we’re seeing continued consistent investment in the Gulf of Mexico,” and predicted rising oil and gas output from the Gulf region in the near future. According to Celata, 33 companies placed 159 bids on a total of 148 leases. This included major giants such as BP, Royal Dutch Shell, and Chevron.

Some said, though, that the massive offering was especially poorly timed. A statement from the thinktank Center for American Progress said:

“Offering a nearly unrestricted supply in a low demand market with a cut rate royalty and almost no competition is bad policy and an inexcusable waste of taxpayer resources.”

And analysts, such as William Turner from consultancy Wood Mackenzie said the results of the auction were “on par with the all-time lows that we saw last year,” during a 2017 lease sale that earned a total of $121 million.

Annual offerings of Gulf of Mexico leases are routine for the US government, but the amount of land offered this time was unprecedented. Wood Mackenzie had projected increased demand this year thanks to oil prices that had risen since a year ago. But it also warned that competition from abroad could limit demand, and warned that new tariffs on US steel imports could affect costs for development.

A statement from National Ocean Industries Association warned:

“The United States must continue to evaluate how to keep the Gulf of Mexico and other parts of the U.S. outer continental shelf attractive in light of competition from Brazil and Mexico.”

The administration has also looked to areas of the Arctic, Pacific, and Atlantic Oceans for more massive offshore lease sales. However, these proposals have faced resistance from governors in a number of states.

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