Ban on New Federal Development Would Risk U.S. Security, Jobs, Environment

Mark Green
Posted September 9, 2020

Four questions for proponents of policies that would effectively end new natural gas and oil development on federal lands and waters:

• Where will the oil come from that won’t be produced here at home because of such a policy?
• Where will nearly 1 million Americans find new work after this policy costs them their jobs?
• What will Americans do without because of higher energy costs resulting from the policy?
• How will the U.S. continue making environmental progress if increased coal use caused by the policy raises carbon dioxide emissions?

These and other questions are prompted by a new analysis projecting the effects of halting new natural gas and oil on federal lands and waters -- prepared for API by OnLocation with the U.S. Energy Information Administration's National Energy Modeling System, which EIA uses to produce its Annual Energy Outlook. API President and CEO Mike Sommers:

“Banning federal leasing and development on federal lands and waters would derail decades of U.S. energy progress and return us to the days of relying on foreign energy sources hostile to American interests. This 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.”

Former Vice President Joe Biden’s policy website promises he will stop new federal natural gas and oil development. And, while President Trump just extended the moratorium on offshore oil and natural gas development in the Eastern Gulf of Mexico and to expanded it to the South Atlantic, Biden’s policy pledge would take away existing production, subtract existing jobs and make the U.S. less secure.

Major potential impacts of ending new natural gas and oil development on federal lands and waters, as projected in OnLocation’s analysis:

 

U.S. security weaker

• Offshore oil production would decrease 44% by 2030, while offshore natural gas production would fall 68%
• Oil imports from foreign sources would increase 2 million barrels a day
• U.S. would spend $500 billion more on energy from foreign suppliers through 2030

In 2019, federal lands and waters accounted for 22% of total U.S. oil production (2.67 million barrels/day) and 12% of total U.S. natural gas production (4.37 trillion cubic feet ). More than 70% of federal oil production comes from the offshore. The chart below shows what could happen to offshore production with a ban on new federal development (red line), compared to production otherwise:

 

 

Halting new federal development also is projected to bring increased reliance on foreign supplies of energy and a significant weakening of U.S. security compared to what would happen otherwise.

Look at the charts below. Two million barrels of oil a day in lost domestic production must come from somewhere to meet the daily needs of the U.S. economy – and that somewhere is foreign oil. OnLocation’s analysis projects that net crude oil imports would increase (blue line below) compared to the status quo, and the U.S. would see payments to foreign suppliers for oil and petroleum products rise by half a trillion dollars (blue line) compared to the status quo.

 

 

Jobs lost and economic output reduced

• $700 billion cumulative decline in U.S. GDP through 2030
• Nearly 1 million jobs lost by 2022
• Top natural gas and oil producing states with significant federal lands would be hit especially hard, including New Mexico with more than 62,000 jobs lost and Wyoming, more than 33,000 jobs lost. Texas also would be impacted, losing 120,000 jobs mainly due to the loss of offshore development in the Gulf.

The analysis projects that lost natural gas and oil production due to a ban on new federal development translates into job losses nationally …

 

 

… and especially severe losses in top producing states and western states where the federal government controls significant acreage. That second group includes New Mexico (31.7%), Wyoming (46.7%), Colorado (36.2%) and Utah (63.1%).

 

 

New Mexico Oil and Gas Association Executive Director Ryan Flynn:

“Restricting oil and gas development on federal lands will rob New Mexico of opportunities for economic growth and hollow our schools of critical resources that put teachers in classrooms and help our young children learn. New Mexico has enjoyed economic success in recent years because of investments and responsible development on federally managed lands but changing course now will only ensure that jobs and capital stops at our state border. With vast stretches of public land, it is simply impossible to divorce our economic success from land management policy in western states like New Mexico and funding for education, access to healthcare, and new infrastructure are all on the line as a result.”

Higher household energy costs

• U.S. residential energy costs increase $1.7 billion per year, on average
• Household income reductions every year through 2030, with significant reductions in years 2021-2024

Banning new natural gas and oil development would affect domestic production, which is projected to increase the cost of energy for transportation, heating and cooling – and decrease household income for other priorities. This is a pocketbook issue for millions of Americans. The chart below shows what the analysis projects as the annual increases in energy expenditures (blue bars) and the cumulative total through 2030 (red line). The second chart shows decreased household income by year (blue bars):

 

 

Higher carbon dioxide emissions

• Coal user increases 15% by 2030
• CO2 emissions increase an average of 58 million metric tons

According to the analysis, with a ban on new federal natural gas and oil development, the power sector would respond to higher natural gas prices by shifting from natural gas – currently the leading fuel for power generation (38.4% in 2019) – to coal, which produces higher CO₂ emissions. Fewer coal-fired power plants would be retired, and fewer natural gas-fueled combined cycle and combustion turbines would be built. The projected result is a significant stalling out of U.S. environmental progress. The chart below shows what this increased reliance on coal looks like in the power generation mix:

 

 

As Sommers says above, there’s far too much at stake for an unforced-error policy of taking natural gas and development on federal lands and waters off the table – whether it be in New Mexico or off the Gulf Coast.  

American voters instinctively recognize the stakes. Recent polling of key battleground and other states show an overwhelming majority of Americans say it’s important for the U.S. to produce enough energy here at home to avoid being dependent on others, that natural gas and oil provide valuable benefits to them personally and that natural gas and oil will be significant in the U.S. energy mix decades into the future.

Note to policymakers: 64% of respondents in those key states say they would be more likely to vote for a candidate who supports policies that ensure continued access to natural gas and oil.

As the OnLocation analysis makes clear, a ban on new federal natural gas and oil development, onshore and offshore, would threaten U.S. security, risk job and economic losses, punish American households and undermine efforts to protect the environment.

Campaign platforms and proposed policies matter. They translate into real-world impacts and, when candidates talk about shelving a significant portion of domestic energy production, they have specific consequences.