The Latest Threat to U.S. Energy and Climate Leadership

Lem Smith
Posted December 1, 2021

In the midst of one of the busiest travel weeks of 2021, when rising energy costs were readily apparent to many more Americans, the administration took another step to weaken U.S. energy leadership. Released Friday morning, the Department of the Interior’s (DOI) latest report assessing the program for natural gas and oil activities on federal lands and waters proposes more burdensome restrictions on U.S. energy production that could undermine U.S. economic recovery, national security and environmental progress.

This report on DOI’s “update” to federal energy development describes changes that could disincentivize natural gas and oil production by reducing opportunities for resource exploration and raising royalty rates for businesses at a time of high inflation and shaky global financial markets. It follows other moves to discourage American energy production, including the cancellation of the Keystone XL pipeline and the inclusion of a natural gas tax in the House-passed Build Back Better Act. Taken together, it likely means less U.S. energy production, more imported oil and gas, higher costs for consumers, and more emissions.

The natural gas and oil industry supports maximizing the benefits of federal energy development for U.S. workers and their communities. Therefore, API strongly urges DOI to continue leasing on federal lands and waters without adding unnecessary restrictions on development.

Congress should reject the changes proposed in the report because they pose a threat to U.S. economic recovery, national security and environmental progress. The changes to natural gas and oil leasing could:

• Raise Energy Costs – Days after a public speech in which the White House said the president “is using every tool available to him to work to lower prices and address the lack of supply,” his Interior Department proposed to increase costs on American energy development with no clear roadmap for the future of federal leasing. (By the way, banning exports isn’t the solution, either.)
• Jeopardize Economic Growth – The natural gas and oil industry is an engine for economic growth, and the industry supported nearly 8% of the U.S. GDP in 2019. With gasoline and natural gas costs soaring for families across America – and the world’s energy demand growing every day – why restrict the safe and responsible development of U.S. natural resources?
• Increase Foreign Oil Imports – Imposing new costs on natural gas and oil leasing on federal lands effectively equates to an “import more oil” policy, which hamstrings our nation’s geopolitical standing. It’s a very clear choice for U.S. policymakers: responsibly produced domestic fuels or imported fuels with higher security risks and potentially significantly lower environmental standards.
• Counteract Climate Solutions – Restricting U.S. natural gas and oil production will not reduce our nation’s energy demand. Instead, studies project that our nation will offset this demand with other, less environmentally friendly fuels. Without natural gas and oil development on federal leases, carbon dioxide emissions could increase by 5.5% in the domestic power sector by 2030, due to increased coal use for electricity generation, according to a recent analysis prepared for API by OnLocation.

Energy produced on federal lands and waters accounts for 11% of U.S. natural gas production and nearly one-quarter of U.S. oil production. Domestic resource development supports widespread access to affordable, reliable fuels, and this activity generates over $100 billion in government revenue annually, supporting public education, infrastructure and conservation projects across America.

Policymakers in both parties agree President Biden must unleash America’s resource potential and safeguard our nationwide gains toward energy leadership, geopolitical security and climate progress.