Presumptive Democratic Party presidential nominee Joe Biden’s oil and gas policies will kill jobs in energy-producing states and voters need to be aware—especially those reliant on those jobs and revenues. Biden has been outspoken in his opposition to the country’s role as the world’s top producer of oil and gas, endorsing a ban on new hydraulic fracturing and new oil and gas drilling on federal lands. Further, Biden referred to the need to address climate change as a “war-like situation” that requires the same kind of global response as the coronavirus pandemic. Biden supports action by Congress that would put a tax on oil, natural gas, and coal. “We have to act dramatically, boldly if we’re going to save lives in this country and around the world. I look at climate change in exactly the same way,” Biden said regarding the coronavirus pandemic.
Banning Hydraulic Fracking
Hydraulic fracturing is the practice of using water pressure to open tight shale rock formations allowing oil and natural gas to flow. The technology has brought considerable economic prosperity and jobs in energy-producing states and made the U.S. the largest oil and gas producer in the world. Fracking, combined with horizontal drilling, is used in 95 percent of the oil and gas wells drilled in the United States, so a ban would have immediate economic consequences in Pennsylvania, Ohio, Texas, New Mexico and North Dakota—to name just a few states. The result would be increasing energy costs, falling GDP, and increased oil imports that would be harmful to our national security. These would be dire consequences for the oil and gas industry and the country.
A federal ban on new fracking would bring an end to Trump-era energy dominance and its economic and geopolitical benefits. Domestic energy prices would increase and the environmental gains in the generating sector from natural gas use for electric generation—the single largest source of generation in the power sector—would be in jeopardy, relegating the sector to reliance on intermittent wind and solar power that cannot perform 24/7. To concretize this threat, consider the sophisticated, energy-dependent medical equipment needed by patients inflicted with COVID-19. This equipment and general operation of hospitals require reliable electricity, which is put at risk by the intermittent nature of wind and solar energy.
Biden also supports a ban on all new oil and gas permitting on federal lands and waters, which will affect many of these same states, hurting jobs, local and state revenues used to support schools, and other critical budget areas. According to a study by the Chamber of Commerce, a ban on new drilling leases would reduce revenues by $6 billion nationally over the next 15 years and eliminate 270,000 U.S. jobs. The United States owns 2.46 billion acres of mineral estate between the onshore and offshore areas of the nation. If this were all surface area, it would be the third-largest nation in the world, after Russia and Canada, and it is larger than the entire U.S. landmass.
According to another study by the National Ocean Industries Association, banning all new oil and gas permitting in federal waters would cost almost 200,000 jobs, deny the U.S. government billions of revenue dollars, and push offshore production to other countries. Despite almost all U.S. offshore drilling occurring in the western and central portions of the Gulf of Mexico, jobs that support the offshore oil and gas industry—which is capital-intensive and reliant on the manufacturing of associated equipment such as pipes, valves, and motors—are in nearly all 50 states.
The Oil and Gas Sector Is Already Hurting
The oil and gas sector is already reeling from the double whammy of lost demand caused by the worldwide spread of SARS-CoV-2 and the price war between Saudi Arabia and Russia. U.S. oil prices have fallen precipitously, even into negative territory for the first time in history. While they are now teetering around $40 a barrel, the price is still below the breakeven point for many shale wells. Despite the resiliency of many large U.S. oil and gas companies, smaller independents and the oilfield service companies that work for them are hurting financially with many filing for bankruptcy protection. Thousands of oil and gas workers have been laid off and are hoping to be rehired as the demand for oil returns during the economic recovery.
Biden’s energy and environmental policies will be detrimental to the U.S. economy and its energy security. He will essentially put the U.S. oil, natural gas, and coal industries out of business and tax the American public on any energy they use that is generated by oil, natural gas, or coal. That means Americans will be taxed on their electric bills since almost two-thirds of the nation’s electricity is generated by fossil fuels, when they drive their cars since most vehicles run on gasoline or diesel fuel, or when they fly to family functions or business meetings since jet fuel is produced from oil. These taxes will devastate the U.S. economy, while Biden’s re-commitment of the U.S. to the Paris Agreement will endorse China’s continued economic investment in fossil fuel energy.