Experts Warn of Negative Impact of Continued Federal Drilling Ban

The Interior Department this week announced they won’t sell new drilling rights on federal lands and waters until at least midsummer – a move that has raised concern among experts and elected officials. GAIN strategic advisors Col. Tom Magness (US Army, retired), former EIA Administrator Guy Caruso, and former Representative Charlie Melancon recently sent letters to Secretary of the Interior Deb Haaland regarding the negative economic, environmental, and national security implications of the ongoing moratorium on new oil and gas leases on public lands.

Energy-producing states with large amounts of federally-owned land have much to lose, as a report from the American Petroleum Institute found nearly one million jobs would be lost by 2022, and over $9 billion in government revenue at risk.

Below are key excerpts from Col. Magness and Rep. Melancon’s letter to DOI:

Environmental Impact

Rep. Melancon argues:

Combating climate change must be a high priority and the Biden administration should be commended for proposing bold action, but halting federal leasing could actually be counterproductive. An analysis by the American Petroleum Institute found that a leasing ban on new and existing permits would cause U.S. coal use to increase by 15% by 2030, a departure from the path the U.S. is currently on, which involves aggressive switching from coal to gas. Because of the transition to natural gas, there was a 10% decrease in net nationwide greenhouse gas emissions from 2005 to 2018. The same time period also saw the U.S. reduce harmful emissions by 57%, but a federal leasing ban could reverse decades of progress our country has made in reducing its carbon footprint.

A federal leasing ban would walk back progress on conservation, too, as DOI recently announced $249 million for Gulf states for coastal conservation, restoration, and hurricane protection programs, including nearly $88 million for Louisiana. This funding, which is central to state-run conservation efforts, could be jeopardized because of the federal leasing ban, endangering conservation efforts in my state, as well as Alabama, Mississippi and Texas. For example, Louisiana uses such funding for outdoor recreation, public parks, supporting the Louisiana Department of Wildlife and Fisheries, and protecting places such as the Bogue Chitto National Wildlife Refuge.

Economic Impact

Col. Magness notes:

Another detrimental impact of the ban is the effect on jobs in our country, as the same analysis predicts the potential of nearly 1 million jobs lost by 2022, in top producing states including your home state of New Mexico, Utah, Colorado and Wyoming. Now is not the time to put good paying oil and gas jobs at risk, while our country continues to rebound from the economic downturn brought on by the COVID-19 pandemic.

Rep. Melancon also points out the impact to his home state of Louisiana, as well as other top energy producers:

A Louisiana Mid-Continent Oil and Gas Association analysis last fall, in fact, found that such a moratorium would cost 48,000 jobs in Louisiana alone by 2022. As Louisiana’s governor, John Bel Edwards, explains, “The continued leasing and development of oil and natural gas in the Gulf of Mexico is critical not only to the coastal Gulf states that host the infrastructure and support industries for the Gulf OCS exploration, but to the economy and energy security of the nation as a whole.”

Beyond the Gulf, states like New Mexico would also suffer, with New Mexico’s Democratic Sens. Martin Heinrich and Ben Ray Lujan voicing concerns that they have asked for “financial assistance to offset the impact of the moratorium and give certainty as they plan for the future, and explained that New Mexico might also need more time to transition away from drilling.” If the administration sustains its leasing ban, eight Western states could face tax losses of more than $110 billion and state governments would see lease-generated royalties and tax revenues that fund public services such as education and police disappear.

National Security Impact

Col. Magness writes:

My primary concern is the impact the federal leasing ban will have on our country’s national security, as a result of increased reliance on countries like Russia and Saudi Arabia for our energy needs. If recent incidents in the Suez Canal have taught us anything, it is the fragility of energy security and the importance of energy independence.

Should the Biden administration decide to move forward on the federal leasing ban, our imports from foreign sources have the potential to increase by 2 million barrels a day and spend $500 billion more on energy from foreign suppliers by 2030, according to an analysis last year. This would put our country at a severe disadvantage and leave the United States vulnerable to supply shortages from adversarial nations.

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