Administration’s Leasing Approach is a ‘Step Backwards’ on U.S. Energy

Mark Green
Posted January 27, 2021

As the Biden administration takes the first step toward a complete ban on federal natural gas and oil development – including the offshore that accounted for more than one-fifth of U.S. oil production in 2019 – turning America’s energy strength into weakness by launching a new era of increased dependence on foreign oil, let’s see how out of step the approach is with the American people.

From polling of voters last summer in key battleground and other states:

• 93% said it’s important the U.S. produce enough energy to avoid being reliant on foreign oil.
• 90% said it’s important to create access to domestic energy.
• 69% said safe domestic natural gas and oil production makes the U.S. less reliant on foreign energy and has increased U.S. security. (Just 16% disagreed.)

All three viewpoints sharply contrast with where the Biden administration appears to be going with its announced halt on natural gas and oil leasing on federal lands and waters – which many believe will become a full ban on federal development.

Put simply, the White House is advancing an import-more-oil policy – one that would discard the hard-earned security, economic and environmental gains from a decade and a half of domestic energy resurgence.

Though the administration asserts this is part of an effort to tackle climate change, the approach is based on faulty assumptions about carbon dioxide emissions savings from halting federal development. And, as we say, it reflects a serious misreading of where Americans are on energy and U.S. energy leadership.

API President and CEO Mike Sommers said while industry shares the administration’s goal of addressing climate change, the announced leasing halt is a “step backwards” for environmental progress, economic recovery and energy security. Sommers:

“With a stroke of a pen, the administration is shifting America’s bright energy future into reverse and setting us on a path toward greater reliance on foreign energy produced with lower environmental standards. Limiting domestic energy production is nothing more than an ‘import more oil’ policy that runs counter to our shared goal of emissions reductions and will make it harder for local communities to recover from the pandemic.”

Sommers, during a conference call to brief reporters:

“I don’t think any American wants to go back to the days of being held hostage to foreign entities that don’t have America’s best interests at heart, as we lose American energy leadership.”

Texas Oil and Gas Association President Todd Staples, also on the call, said the administration’s action is like a quarterback attempting a long pass but fumbling the ball to the other team.

According to an API analysis, banning natural gas and oil development on federal lands and waters could cost 1 million American jobs and result in a $700 billion cumulative decline in U.S. GDP by 2030. Residential consumers could spend a cumulative $19 billion more on energy over the next decade. Impacts in producing states, including New Mexico, Wyoming, Texas, Louisiana and others would be severe in terms of jobs and revenues generated for state governments. Jim Willox, president of the Wyoming County Commissioners Association, also talking with reporters:

“We in Wyoming want to be part of the solution, and we have demonstrated that we can and will be willing partners. But unilateral action through executive orders is not engaging nor comprehensive and will have a devastating effect on local governments in Wyoming and across the West.”

To be clear, with the national and state economies struggling to recover from the pandemic, there could hardly be a worse time for killing American jobs and hindering growth. Promises that industry’s workers, with an average salary that’s about twice that of the rest of the economy, will land new jobs installing solar panels ring fairly hollow.

On the environment, API’s analysis found – contrary to the administration’s assertions – that ending federal natural gas and oil development would increase the use of coal and U.S. carbon dioxide emissions in the process – by 5.5% in the power sector by 2030. At the same time, CO₂ emissions savings from eliminating federal development would total less than 0.1%.

The fact is consumer demand for energy is only going to increase, and the energy that isn’t produced domestically probably will be imported from countries with less stringent environmental standards than our own at a higher emissions cost. An Obama-Biden administration report said CO2 emissions from U.S. outer continental shelf production are less, on a per-barrel of oil equivalent basis, than overseas production.

Unfortunately, the administration seems to ignore the CO₂ savings from increased use of domestic natural gas – emissions progress without killing jobs or hamstringing the economy. From 2005 to 2019, power sector emissions decreased 33%, largely because of cleaner natural gas. While the administration is sensitive to what around the world think about America’s climate approach, it doesn’t acknowledge that since 2000 the U.S. has led the world in CO₂ emissions reductions. Through exports of U.S. liquefied natural gas, our trading partners around the globe can realize the environmental benefits of natural gas.

As stated in this post, in the natural gas and oil industry, the administration has a willing partner on achieving the nation’s environmental and climate goals. For example, API recently announced its support for direct regulation of methane and industry’s desire to work with the administration in developing a durable regulatory regime that follows the law.

There are paths that will continue to generate positive results and progress – again, without punishing American workers and the economy and weakening the nation’s security. That’s not the path the administration is following. Sommers:

“One thing we know is that the [International Energy Agency] model suggest that even if every country were to meet their goals under the Paris Climate Accords the world would continue to consume a lot of oil and gas. In fact, according to their analysis, still 46% of the world’s energy would come from oil and gas … [W]e want to make sure that that oil and gas comes from the country that has [one of] the highest environmental standards and has a proven record of success in meeting environmental goals. And that is the American oil and gas industry.”