President Joe Biden’s ban on new federal natural gas and oil leasing will increase America’s reliance on foreign energy from countries with lower environmental standards, gradually strangle an important revenue stream for state education programs and federal conservation efforts, and have a detrimental impact on a key driver of U.S. emissions reductions. The consequences of today’s ban will be disproportionately felt in New Mexico where the Democratic governor has previously said she would request a waiver exempting her state from “any drilling ban.”
U.S. natural gas has been a key driver in reducing America’s CO2 emissions, but less domestically produced energy will mean more reliance on foreign energy from countries with lower environmental standards.
- According to an Obama-era BOEM report analyzing the effects of offshore leasing restrictions, experts found that America’s GHG emissions will be little affected and could, in fact, increase slightly in the absence of new offshore leasing. The report cites foreign sources of oil would substitute for reduced American offshore supply, and that production and subsequent transport of foreign oil would emit more GHGs.
- CO2 emissions from electric power generation have decreased by 33% from 2005 to 2019, in part, due to the increase in natural gas-generated power.
- The U.S. leads the world in emissions reductions since 2000 thanks to greater use of natural gas, which produces about 50% fewer CO2 emissions than coal in power generation, and advancing technology and innovation.
- By exporting liquefied natural gas (LNG), America has the capacity to share this low-cost, lower-carbon resource with our trading partners in Europe, Asia and around the world. This is especially important in places like China, India and Southeast Asia where coal consumption is projected to increase.
As API President and CEO Mike Sommers said, “Restricting development on federal lands and waters is nothing more than an ‘import more oil’ policy. Energy demand will continue to rise—especially as the economy recovers—and we can choose to produce that energy here in the United States or rely on foreign countries hostile to American interests.”
- 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.
- The amount of oil produced on federal land isn’t something to be brushed aside. If U.S. federal land was treated as its own country, the 2.67 million barrels of oil it produced daily in 2019 would make it the 11th largest daily oil producer in the world.
State, Local, & Conservation Funding
A ban on new natural gas and oil leasing on federal lands starts the gradual strangulation of a vital revenue stream used to fund federal conservation efforts, and education programs in many states.
- Natural gas and oil production on federal land and offshore areas generated nearly $10 billion in federal revenue in 2019, with states receiving over $2.4 billion in disbursements and close to $900 million going to the Land and Water Conservation Fund. Over the past four decades, more than $314 billion in mineral leasing revenues has been disbursed.
- A recent study released by the state of Wyoming found that a “ban on new oil and gas drilling leases on federal lands would cost eight Western states $8.1 billion in tax revenue and $34.1 billion in investment in the next five years”
- KEY TAKEAWAY: The Washington Post: A federal drilling ban “could eventually deprive state governments of revenue streams from royalties used to fund schools, parks and other projects liberals usually like.”
A ban on new federal natural gas and oil leases would be detrimental to New Mexico, where over half of the oil and natural gas drilling has taken place on federally-controlled land.
- The New Mexico Legislative Finance Committee reported that 35% of the state’s revenue came from activity related to the natural gas and oil industry in FY2019. Reuters reports that “more than $1 billion of the state’s $2.4 billion in oil-and-gas revenue goes to public schools.” (For context, the total state budget is about $7 billion.)
- New Mexico’s Democratic Governor, Michelle Lujan Grisham: “Without the oil and gas industry, without the energy effort in this state, no one gets to make education the top priority moving forward.”
- FLASHBACK: If Biden wins the election, Governor Lujan Grisham preemptively told Reuters “she would request the Democratic president provide her state a waiver exempting it from any drilling ban ‘to allow us to continue to produce in New Mexico.’”