On the back of news President Trump has decided to support a moratorium on offshore drilling off Florida, Georgia and South Carolina coasts as well as candidate Biden’s commitment to banning federal leasing practices the American Petroleum Institute has published a study analyzing the impacts of a federal leasing ban (which would halt offshore operations).
The skinny on the study is this: with a federal leasing ban progress in the American energy space would suffer dramatically, and as American Petroleum Institute CEO Mike Sommers noted would “return us to the days of relying on foreign energy sources hostile to American interests,” and is “ultimately a choice between American-made energy and foreign energy, a choice between American jobs and foreign jobs. It’s clear a federal leasing ban should be off the table – there’s far too much at stake for American workers, local economies and our nation’s energy security.”
Each year the Bureau of Land Management organizes lease auctions for access to federal lands. Energy companies then bid for these leases and the opportunity to access natural resources on those lands.
The Congressional Research Service has shown that 26% of the country’s crude oil reserves and 22% natural gas reserves are on federal land. Although production on nonfederal land has jumped in the past decade, federal leasing operations make up a significant portion of American energy and are essential to hopes of keeping the country a net energy exporter as well as preserving the many benefits that come along with that position.
The American Petroleum Institute sought out to quantify the costs of a ban on federal leasing. The report shows that a federal leasing ban today would result in the country spending a half trillion dollars to offset production cuts on federal lands by importing some 2 million barrels of oil a day from foreign sources.
As the coronavirus pandemic has shown, shocks to the energy industry ripple throughout the American economy.
A ban on federal leasing would mount to a similar shock and the Institute estimates that the GDP would fall by $700 billion through 2030 and government tax revenues would decrease by $9 billion. An important component of federal leasing is its tax generation, much of which is directed to fund Land and Water Conservation Fund, our nation’s largest conservation fund.
Because of the widespread reserves and operations nationwide American workers would suffer with Texas expected to lose 120,000 jobs, New Mexico an added 62,000, and Wyoming 33,000 jobs. The Institute suggests as many as 1 million jobs could be lost by 2022, especially in energy producing heavy states.
Lastly, it is important to consider the environmental progress afforded by natural gas. As a less carbon-intensive (and plentiful) resource, natural gas availability helps displace coal-fired energy and allows the country to reduce greenhouse gas emissions in the process.
How can the country continue to make environmental gains by hamstringing the very resource central to reducing emissions? Elected officials have left the question unanswered but it is clear that environmental progress would stall with a federal leasing ban.
By banning federal leasing practices the country will undermine and undo great progress in the energy industry towards energy security. In the process of becoming energy sufficient the economic successes (and availability of affordable energy) have uplifted many Americans – the story will be different without federal leasing.