The Biden administration released an executive order Wednesday to halt drilling on non-tribal federal lands pending a review of the federal oil and gas leasing program. The order is part of a package that addresses land conservation and the reduction of greenhouse gas emissions. President Biden also set a goal of protecting 30 percent of federal land and water from future drilling by 2030, which equates to 738 million acres of the total 2.46 billion acres owned by the public. And, federal agencies will be ordered to eliminate fossil fuel subsidies “and identify new opportunities to spur innovation.” Removing the tax deductions that fossil fuel companies receive, which are not subsidies, will purportedly help pay for Mr. Biden’s $2 trillion climate change plan.
The executive order to freeze new oil and gas leasing builds on actions Mr. Biden took during his first days in office. He put a moratorium on oil and gas leasing in Alaska’s Arctic National Wildlife Refuge, reversing Congressional action taken in 2017 to begin leasing in the area. His Interior Department subsequently issued an order suspending all onshore and offshore fossil fuel-related authorizations for 60 days unless they are approved by the department’s senior leadership. American tribes, however, are exempt from the 60-day pause after an oil-producing tribe in Utah asked Interior for an exemption, saying it would hit its economy and sovereignty.
How much the Biden administration can limit access to offshore oil and gas, and drilling on federal lands, will likely be decided by the courts. There are laws that in some cases require the federal government to make federal territory available for drillers and miners; other laws, however, may be interpreted as giving the president broad authority to limit what territory is available.
Restricting development of oil and gas drilling on federal lands and waters is nothing more than an “import more oil” policy, which benefits OPEC and Russia, not American families. The Biden administration is leading the United States toward 1) more reliance on foreign energy from countries with lower environmental standards, 2) hundreds of thousands of good-paying job losses, 3) billions in reduction in government revenue for education and conservation programs, and 4) higher energy prices for Americans.
Oil Companies Stock-Upped on Permits
Oil companies used the final months of the Trump administration to stock up on permits. Federal permitting in New Mexico more than tripled from 2017 to 2020; offshore permitting rose sharply starting in August, and by December had doubled from February. Those drilling permits will delay the biggest impacts of oil drilling on federal lands for four years or more. As current leases expire and exploration slows, annually the U.S. will lose upwards of 300,000 barrels of day in expected production, but peaking after 2031. Oil production on federal land and waters totals about a billion barrels a year.
The most acute impact of Mr. Biden’s drilling restrictions on Federal lands are expected in New Mexico. Shale companies have drilled some of the nation’s most prolific oil wells in New Mexico’s portion of the Permian Basin. New Mexico’s oil production on federal land more than doubled in three years to 162 million barrels in fiscal 2019, generating revenue of $1.3 billion, which is split with the state of New Mexico. Over half of the most productive acreage in New Mexico’s key Eddy and Lea counties is located in federal land, and about 65 percent of Exxon Mobil Corp.’s drilling activity in the state from 2017 to 2019 was in federal land, as was 90 percent of Chevron Corp.’s. The number of permits oil companies sought in New Mexico surged in the second half of last year to more than 1,600.
Longer-Term Consequences of a Ban
Many negative consequences result from a ban on federal leasing on natural gas and oil development on public lands and waters. An analysis of the issue projects that a ban would shift the United States to foreign energy sources, cost nearly one million American jobs, increase carbon dioxide emissions and reduce revenue that funds education and key conservation programs. U.S. GDP would decline by a cumulative $700 billion through 2030. Over $9 billion in government revenue, including funding for state education and conservation programs would be lost. Nearly one million jobs would be lost by 2022, with top production-states suffering significant losses:
- Texas would lose nearly 120,000 jobs.
- New Mexico would lose over 62,000 jobs.
- Wyoming would lose over 33,000 jobs.
By 2030, offshore production for natural gas would decrease by 68 percent and for oil by 44 percent. U.S. oil imports from foreign sources would increase by 2 million barrels a day. The United States would spend $500 billion more on energy from foreign suppliers through 2030. Coal use would increase by 15 percent by 2030 and carbon dioxide emissions would increase by an average of 58 million metric tons to represent a 5.5 percent increase in the power sector by 2030. This effort thus appears to be all pain, with no gain, despite claims by the Biden administration to the contrary.
Without access to energy development on federal lands and waters, U.S. energy supply will shift to foreign sources, cost nearly one million American jobs, increase carbon dioxide emissions and reduce revenue that funds education and key conservation programs. American oil and natural gas is safe, clean and abundant, and misguided policies will only stifle our nation’s energy and environmental progress. A better approach would be to support the recovery from the coronavirus pandemic with sustainable policies that benefit struggling Americans with affordable, reliable, American energy. The Biden leasing ban is a radical anti-energy move destined to increase energy prices.