At his debate with Bernie Sanders on March 15, 2020, Democratic presidential candidate Joe Biden said he would prevent oil companies from drilling as part of his effort to combat climate change. At the CNN debate, he said “No more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill, period. Ends.” He also said there would be no “new fracking” and “not another coal plant will be built” under his administration. The U.S. Chamber of Commerce did two studies that address these issues: a ban on hydraulic fracturing and a ban on drilling on federal lands and offshore areas. In both cases, the effects are devastating, with huge losses to the economy, higher energy prices, and lower employment.
Biden’s policies would produce similar effects on the oil industry as the coronavirus pandemic and the Saudi-Russia price war, only in Biden’s case, demand for oil products would still be strong and the United States would become dependent on foreign oil again, making Saudi Arabia and Russia jubilant, but increasing U.S. energy prices and putting our national security in danger.
Impact of a Ban on Fracking
The U.S. Chamber of Commerce’s Global Energy Institute found that a fracking ban would double gasoline prices as oil prices spike to $130 per barrel, raise the average cost of living by $5,661 per person, and reduce employment by 19 million people over a five-year period. Prohibiting fracking would also quadruple electricity prices, reduce Gross Domestic Product (GDP) by $7.1 trillion, and increase natural gas prices by 324 percent from 2021 to 2025, causing household energy bills to more than quadruple. This would be the equivalent of a major recession.
A ban on fracking would effectively represent a ban on U.S. natural-gas extraction, given that 95 percent of natural-gas production involves hydraulic fracturing. Natural gas is not only used for electricity generation where environmentalists want it replaced with renewable energy, but it is also used in cooking and heating homes and other buildings, in factories for manufacturing and processing, and in agriculture to pump water. In 2019, all renewables (hydro, solar, wind, biomass, and geothermal) represented 11.4 percent of the nation’s energy supply. Wind and solar combined represented just 3.8 percent of that supply. Politicians’ expectation that these sources will replace fossil fuels is bewildering. Yet, for some reason, some Americans want to believe them. Perhaps Michael Moore’s new movie, Planet of the Humans, will help convince some of the folly of so-called “green energy” sources.
The Global Energy Institute report concluded that local, state, and federal tax revenue would decline by a combined $1.9 trillion if fracking were banned, removing a major source of funding for schools, first responders, infrastructure, and other critical public services. Hit hardest would be energy-producing states such as Colorado, New Mexico, Ohio, Pennsylvania, and Texas. In Texas, a fracking ban would lead to 3.2 million job losses between 2021 and 2025, and Texas’ GDP would be reduced by $1.5 trillion over the same period.
In Pennsylvania, a fracking ban would result in over 600,000 jobs lost over the next five years. The Keystone State would lose 65,000 oil and natural gas jobs alone between 2021 and 2025, and lower the state’s GDP by $261 billion—roughly a third of the state’s current GDP. In Pennsylvania, the cost of living would increase by $4,654 per capita for goods and services while household incomes in the state would be reduced by about $114 billion. Pennsylvania is currently the second-largest producer of natural gas in the United States, primarily due to the development of the Marcellus and Utica Shales over the past 10 years. And, Pennsylvania’s prowess in manufacturing is once again becoming evident as petrochemical plants are being constructed and industry expands in the state.
Impact of a Ban on Oil Drilling on Federal lands and Offshore
If a ban was imposed on energy production from federal lands and waters, the United States would lose billions in royalties and hundreds of thousands of jobs, according to another report by the U.S. Chamber of Commerce. According to the report, federal and state governments would lose over $11.3 billion in annual royalties, 24 percent of the nation’s fossil fuel production would be imperiled, and 380,300 jobs-about one-third of which are direct jobs (101,600) and the remainder both indirect (75,300) and induced (203,400) jobs would be lost. If a ban is enacted immediately, an estimated $72.3 billion in GDP would be lost. The ban would also remove 42 percent (379 million tons) of coal from the nation’s energy supply, which would cause electricity rates to spike because there is not enough non-coal capacity to make up for the shortfall.
A ban on energy production from federal lands would decimate several states that rely heavily on revenues from federal land production. The states include Wyoming, which would lose 32,600 jobs and nearly $900 million in royalties, New Mexico (24,300 jobs; $496 million in royalties), Colorado (50,000 jobs; $125 million in royalties) and the Gulf Coast (110,000 jobs; $28 million in royalties). Forty-two percent of crude oil and 62 percent of natural gas production come from public lands in New Mexico.
If the ban is on just new drilling leases, leaving existing leases in place, it would reduce revenues by $6 billion nationally over the next 15 years and eliminate 270,000 U.S. jobs.
Biden’s ban on fracking and his ban on oil drilling on federal lands and offshore areas would have devastating results on the economy, jobs, and revenues, and energy prices would skyrocket. Several states would be impacted severely and directly—Texas, New Mexico, Pennsylvania, Colorado, and Wyoming. Americans in all states need to take note of these impacts and think carefully about what these policies would mean for their families, their jobs, and their communities.