Early Missteps on Energy are Blows to Economy, Security

Mark Green
Posted January 25, 2021

It’s unfortunate that the Biden administration’s first couple of energy decisions – effectively canceling the Keystone XL pipeline and signaling it will halt new federal natural gas and oil leasing – work against economic growth and could undermine the nation’s energy security.

With the U.S. economy struggling to recover from the pandemic, there could hardly be a worse time for actions that kill jobs, potentially increase energy costs and cause the U.S. to import more oil.

Sure, the president promised these things during the campaign. Yet, it’s disappointing nonetheless that thousands of U.S. workers associated with building the Keystone XL are now without jobs and that a federal leasing ban could start a new era of increasing U.S. energy dependence. Coincidentally, the administration just unveiled its “Buy American” initiative. What about energy? How about “Buy American Energy”?

However satisfying to anti-industry groups, the KXL and leasing actions are at odds with the way most Americans value U.S. natural gas and oil leadership. Americans count on affordable, reliable energy from natural gas and oil and have long memories of the threat to the U.S. that was posed by growing dependence on foreign oil. As API President and CEO Mike Sommers said last week, President Biden inherited a “strong American energy picture” based on U.S. global leadership in natural gas and oil. The administration’s actions undermine that leadership.

Think of it this way: It’s unimaginable the Kansas City Chiefs would put all-world quarterback Patrick Mahomes on bench for their Super Bowl LV matchup with the Tampa Bay Buccaneers. As much as Bucs fans would like it, there’s no way the Chiefs would sit Mahomes for the big game.

Neither should the new administration weaken the strong energy situation it inherited, one based on the United States’ world-leading natural gas and oil production. Like Mahomes, natural gas and oil are proven and productive. They’re winners for the U.S. economy, security and environmental protection.

Sommers called the Keystone XL decision a reversal for the U.S.:

“Revoking the Keystone XL pipeline is a significant step backwards both for environmental progress and our economic recovery. Pipelines are the safest, most environmentally friendly way to transport energy, and the economy cannot recover at full speed unless we deliver reliable energy from where it is to where it is needed.”

Again, the KXL decision is a blow to more than a thousand of union workers who were already at work on a safe and sustainable project – one that cleared multiple environmental reviews under the Obama-Biden administration – as well as a snub to Canada, America’s neighbor, friend and No. 1 supplier of imported oil. Sommers:

“This misguided move will hamper America’s economic recovery, undermine North American energy security and strain relations with one of America’s greatest allies.”

North America’s Building Trades Unions and the National Association of Manufacturers wrote to the president a few days before his inauguration that modern infrastructure projects are “critical to rebuilding our economy for the long term” and that the shared value of building an economy for everyone is embedded in the KXL project. NABTU’s response to the KXL cancellation:

“North America’s Building Trades Unions are deeply disappointed in the decision to cancel the Keystone XL permit on the President’s first official day in office. Environmental ideologues have now prevailed, and over a thousand union men and women have been terminated from employment on the project. On a historic day that is filled with hope and optimism for so many Americans and people around the world, tens of thousands of workers are left to wonder what the future holds for them. In the midst of a pandemic that has claimed 400 thousand American lives and has wreaked havoc on the economic security and standard of living of tens of millions more, we must all stand in their shoes and acknowledge the uncertainty and anxiety this government action has caused.”

See similar reaction from Laborers’ International Union of North America and the United Association of Union Plumbers and Pipefitters. Alberta Premier Jason Kenney suggested the KXL cancellation seriously damaged the Canada-U.S. relationship:

“By retroactively revoking the presidential permit for this project without taking the time to discuss it with their longest standing ally, the United States is setting a deeply disturbing precedent for any future projects and collaboration between our two nations.”

Sommers used Twitter to push back on the administration’s framing of the KXL cancellation:

.@PressSec, this misses the mark. @JustinTrudeau supports the project because he knows it is environmentally sound. Unions support it because if you spoke with workers on-site, you’d have learned these jobs pay better and last much longer. Read more here: https://t.co/1AlxVSYbRo pic.twitter.com/FWE6VbI3cA

— Mike Sommers (@mj_sommers) January 22, 2021

The upcoming decision to ban new Federal leasing appears to be a first step toward a policy of banning oil and gas development on federal lands and waters. Studies suggest that such a policy would have a damaging effect up and down the energy supply chain, potentially including:

• Increased oil imports
• Decreased U.S. natural gas exports
• $700 billion cumulative decline in U.S. GDP by 2030
• 1 million jobs lost by 2022

Impacts could be especially harmful in producing states, including New Mexico – home of U.S. Rep. Deb Haaland, nominated to be the next Interior Department secretary.

New Mexico and other states that benefit from tax and other revenues generated by natural gas and oil production, could see decreased funding for education, infrastructure and other public services. Fourth-grade teacher Ashley Niman talked about the stakes for public schools in New Mexico at the State of American Energy:

More analysis and reaction in this Energy In Depth post. Sommers warned that cutting off industry’s ability to produce natural gas and oil from federal areas would serve the interests of foreign, often unfriendly producers, not the U.S.:

“Restricting development on federal lands and waters is nothing more than an ‘import more oil’ policy. Energy demand will continue to rise – especially as the economy recovers – and we can choose to produce that energy here in the United States or rely on foreign countries hostile to American interests.

“With this move, the administration is leading us toward more reliance on foreign energy from countries with lower environmental standards and risks to hundreds of thousands of jobs and billions in government revenue for education and conservation programs. We stand ready to engage with the Biden administration on ways to address America’s energy challenges, but impeding American energy will only serve to hurt local communities and hamper America’s economic recovery.”

America’s energy security long has been the goal of the U.S., with every American president since Jimmy Carter calling for reduced dependence on foreign oil. President Biden’s “Build Back Better” economic plan is based on Americans’ hard work and ingenuity, yet this was not helped by the administration’s early energy decisions. Sommers, at State of American Energy:

“Our country has a lot of economic ground to make up, millions more jobs to recover. And when the business at hand is economic revival, no industry can help more than this one. … [O]ur new president and Congress have some big decisions to make on energy. Energy abundance or foreign dependence. American jobs or outsourced jobs. Economic revival or small-town decline. Progress or retreat.”