Its ban would increase the use of coal and intensify CO2 emissions
Long-term prohibition or a significant reduction in the leasing of federal lands and waters to the oil and gas industry would have negative consequences for the population at various levels – such as environmental and economic. Regarding the first, it is estimated that the use of coal would increase by 15%, and CO2 emissions in the electricity sector would be 5.5% by 2030, according to an analysis carried out by OnLocation for API.
Regarding the economic impact, the communities benefiting from electricity services would be the most affected by an increase in rates. “The Biden administration inherits a strong American energy perspective and ensuring access to federal leasing and energy development is critical to continue with low energy costs in homes, reducing greenhouse gas emissions and dependence on foreign energy,” said Frank Macchiarola, API’s Senior Vice President for Policy, Economic and Regulatory Affairs.
According to the expert, the production of oil and natural gas in federal lands and waters allows energy to be affordable and reliable, and at the same time the income generated by the state from this essential activity, primarily supports education, infrastructure, and conservation throughout the country.
The impact would definitely be great, since if a lease ban is imposed, eight western states could face tax losses of more than $ 110 billion, and state governments would face the loss of lease-related royalties and tax revenues that fund public services such as education and police. States such as New Mexico, Colorado, California, and Montana would be adversely affected. As of March, the DOI reported that nearly $ 249 million in energy revenue were disbursed in FY 2020 to the four Gulf offshore oil and gas producing states – Alabama, Louisiana, Mississippi, and Texas.
“We encourage the Department of the Interior (DOI) to expeditiously carry out a review and fully restore the federal lease. Our industry looks forward to continue our longstanding collaboration with the DOI to help meet the dual challenge of reducing emissions while providing affordable and reliable energy for the American people,” said Macchiarola.
In addition, the consequences would be the loss of nearly one million American jobs. Leasing boosts jobs and economic activity in western states: In 2019, oil and gas activity on land managed by the Bureau of Land Management (BLM) generated $ 75.8 billion in economic production and supported 300 thousand jobs. Until the Biden administration, the agreement to maintain the concessions was bipartisan, due to the clear economic and environmental benefits.
On the other hand, an important point is that the average hourly wage in the energy industry is $ 25.60, which represents 34% more than the national average hourly wage, i.e., $ 19.14, according to data from a report published earlier this year by the Association of State Energy Offices, the research firm BW Research Partnership and the nonprofit Energy Futures Initiative, spearheaded by Ernest Moniz, former Secretary of Energy in the Obama Administration.
Precisely former President Obama spoke about leasing and working together with the industry for the benefit of the population. “We have opened public lands. In fact, we are drilling more on public lands than in the previous administration. Natural gas is not appearing by magic, we are fostering it and working with the industry,” he declared in 2012.
A report from the Bureau of Ocean Energy Management (BOEM) of the Obama period that analyzed the effects of offshore leasing restrictions, found that U.S. greenhouse gas emissions will be little affected and, in fact, could slightly increase in the absence of new offshore concessions.