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Biden wants to end new oil and gas leasing: What does that mean for Utah?

Study says 8 Western states would be severely harmed

President-elect Joe Biden announces Pete Buttigieg, the former of South Bend, Ind., as his nominee for transportation secretary during a news conference at The Queen theater in Wilmington, Del., Wednesday, Dec. 16, 2020.
| Kevin Lamarque, via Associated Press

SALT LAKE CITY — With climate change a cornerstone of his campaign and central to his proposed Cabinet picks, President-elect Joe Biden has vowed to put an end to any new oil and gas development on federal lands and federal waters.

That promise, if enacted, would severely impact Utah and seven other western states with huge chunks of federal land, with a new study predicting staggering economic losses and extreme costs to human lives.

Conducted by University of Wyoming professor Tim Considine at the request of the Wyoming Energy Authority, the study lays out these dire predictions of losses to those states over four years under a Biden administration:

  • An average of 72,818 fewer jobs annually
  • Lost wages totaling $19.6 billion
  • Declining economic activity of $43.8 billion
  • Tax revenues decreasing by $10.8 billion

These forecasted impacts play out in Utah, Alaska, California, Colorado, Montana, New Mexico, North Dakota and Wyoming.

In Utah, the study says such a ban would cost 3,232 jobs on average each year during Biden’s inaugural term, $1.3 billion in oil and natural gas investments, losses in production valued at $650 million, a decrease of $255 million in tax revenue to the state, a drop of $1.4 billion in gross domestic product and $664 million in lost wages.

Gov.-elect Spencer Cox says such a ban is the wrong move for Utah.

“A sudden ban on oil, gas and coal right now could crush Utah’s rural economies and further weaken the oil and gas economy. Plus we’re making progress on reducing carbon emissions through cleaner Tier 3 fuels, which now represent at least 75% of all fuel purchased in Utah,” he said. “ I’m looking forward to working with the Biden Administration to develop a more practical approach to energy policy.”

Economic hit: Predicted 2021-24 losses if drilling ban goes into effect in Utah

Industry also hit back.

“While we don’t yet know the Biden plan details, (the) study highlights the importance energy plays in our way of life, but also our state and national economy. Attempts to reduce production in the United States will only support our adversaries and those in the Middle East and Russia who benefit from our own destabilization,” said Rikki Hrenko-Browning, president of Utah Petroleum Association.

In Utah and throughout other parts of the West, the oil and gas industry is largely made up of smaller, independent producers, according to the Western Energy Alliance, a trade association representing hundreds of those producers.

Such a ban, according to the industry, would likely drive many of those producers out of business who are already at a competitive disadvantage because their operating margins are smaller and they have to maneuver through regulations that come with drilling on federal lands.

“President-elect Biden has had to face the reality that he can’t ban fracking nationwide, so he’s pledged to ban leasing and fracking on federal lands. A Biden ban would be devastating to the economies of Western states by eliminating thousands of jobs just as Americans are struggling to recover from the pandemic,” said Kathleen Sgamma, president of Western Energy Alliance.

More than 500 conservation organizations, however, have not only called on Biden to implement such a ban on new development of oil and gas but to extend that to coal until an analysis can be performed that demonstrates any development of those fossil fuels is compatible with at least a 50% reduction of greenhouse gases by 2030.

The groups have already sent Biden the proposed text of an executive order, which also calls on the U.S. attorney general and the secretary of the interior to conduct a probe of companies that may have been issued improper leases and for those existing leases to be canceled.

“They shall immediately initiate a review of the lawfulness of existing leases and shall identify and investigate all instances of fraud or misrepresentation that may have occurred during or prior to the leasing, permitting or development of fossil fuel resources on public lands or waters and whether any company engaged in efforts to conceal, deny, or misrepresent climate science or the risks and harm from fossil fuel extraction,” the suggested executive order reads.

For years, many of those leases have been challenged by groups like the Southern Utah Wilderness Alliance and WildEarth Guardians, which have been at the forefront of litigating leases offered under the Trump administration’s energy dominant agenda.

“For our health and prosperity, President-elect Biden needs to make transitioning from fossil fuels a No. 1 priority,” said Jeremy Nichols, climate and energy program director for WildEarth Guardians. “That starts by taking bold action to get our federal government out of the business of selling coal, oil, and gas, and instead put public lands and waters to work for the climate.”

But the study contends stopping production of oil and gas on federal public lands will only shift emission consequences to foreign producers like Russia or Saudi Arabia that aren’t subject to environmental regulations like those in the United States.

“That response comes up a lot from people who are opposing climate action,” Nichols said. “But there is recognition that even at small levels, we need to take bold action. We need to send the right signals and set the right tone. ... If we don’t start somewhere, we are never going to make progress.”

The eight states in the study accounted for 37% of U.S. oil production from 2003 to 2019 and 32% of natural gas production from 2013 to 2019 — the year that for the first time in more than 60 years the United States became energy independent and the world’s leading global producer.

In fact, a Forbes story points out that Ohio is on pace in the 2020s to produce more oil and gas than Russia. Utah ranks fourth in the country for oil production on public lands, while it is ranked fifth for its natural gas production on public lands.

An elimination of those domestic resources would once again put the United States in a position of being beholden to foreign actors, and some that are hostile, the industry notes, pointing to the supply stranglehold inflicted by OPEC with its oil embargo that began in 1973. When adjusted for inflation, the price per barrel more than doubled in a span of two years.

Hrenko-Browning pointed to numbers from the Energy Information Administration that shows the oil and gas industry in the United States has been integral in the country leading the world in 2019 with the largest carbon dioxide emissions reductions. The country, she added, has been the world leader in reduced carbon dioxide emissions since 2005.

“To meet our shared goals of a better environment and continued economic strengths, we must take a factual and collaborative approach to our energy future rather than picking winners and losers,” she said.

But Nichols believes there is much more to be done and the numbers in the study, as well its other conclusions, should be “taken with a grain of salt,” because they were compiled by a researcher with strong ties to the oil and gas industry.

While there may be financial impacts, Nichols said the time is now to start weaning the country from harmful fossil fuels.

Sgamma countered that Biden is playing games with the livelihoods of people in the West.

“He’s calculating that he won’t pay a political price while satisfying radical climate activists, but he would be sacrificing the livelihoods of thousands of Westerners throughout many sectors of the economy,” Sgamma said. “We hope this report convinces him not to inflict economic pain on westerners. If he makes good on a Biden ban, the alliance will be in court within hours.”

With Trump’s appointment of more than 200 federal judges during his time in office, new regulations or executive orders from Biden will have to withstand a type of judicial scrutiny unlike that faced by former President Barack Obama. So how any court challenges play out will be worth watching.

Correction: An earlier version incorrectly said the study was commissioned by the Western Energy Authority instead of the Wyoming Energy Authority.

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