In a review of a recent study on Democratic presidential candidate Joe Biden’s official campaign plan that would ban new oil and gas permitting on public lands and waters, the Institute of Energy Research (IER) cautioned that such a ban would cause damage to the U.S. energy industry as well as the nation’s economy.
The ban would effectively stop the government from issuing approvals for drilling through the duration of a lease, even if the lease was issued before Biden took office.
IER cited a study released last month by the National Ocean Industries Association (NOIA), The Economic Impacts of the Gulf of Mexico Oil & Natural Gas Industry.
“The offshore industry plays a vital role in the economic and energy wellbeing of the U.S. However, Democratic presidential candidate Joe Biden and others have pledged, ‘No offshore drilling.’ Political efforts to limit offshore oil and natural gas production would not only devastate Gulf Coast economies but would damage the U.S. as a whole,” the NOIA study said.
Biden’s proposal would cut almost 200,000 jobs, deny the U.S. government billions of revenue dollars, and push offshore production to other countries, according to NOIA. The majority of all U.S. offshore drilling occurs in the western and central portions of the Gulf of Mexico, which accounts for 15 percent of the nation’s oil production and 3 percent of the nation’s natural gas production. However, jobs that support the offshore oil and gas industry, which is capital-intensive and reliant on the manufacturing of associated equipment like pipes, valves, and motors, are in nearly all 50 states.
“A strong Gulf of Mexico oil and gas industry means a strong America,” NOIA President Erik G. Milito said. “From buoy specialists in Maine to composite material engineers in Oregon to software companies in Florida, every state has jobs and economic investments linked to the Gulf Coast. The lessons and warnings from the report are especially important now, as our industry fights to recover from the existential threat from COVID-19 and the Saudi Arabia-Russia oil price war.”
The NOIA study assumes the government would issue no new drilling permits beginning in 2022, but permits already approved for existing leases would be unaffected. However, producers on existing leases would need periodic approval from the government during the average 10-year drilling permit.
The study estimates that the impact of no new drilling permits for offshore oil and gas production in the Gulf of Mexico would reduce the average combined oil and natural gas production from roughly 2.5 million barrels of oil equivalent per day in 2022 to about 1.1 million barrels of oil equivalent per day in 2040. Average annual employment is also projected to drop from 370,000 jobs nationally to 179,000 jobs – a 52 percent decrease.
The study also projects that the impact of no new drilling permits would result in a 61 percent reduction in government revenues to an average of about $2.7 billion per year. Additionally, average annual contributions to GDP are projected to decline 55 percent to $14.2 billion.
“President Trump’s plan of energy dominance has made the United States the largest oil producer in the world and has provided reliable and affordable energy to Americans,” IER concluded. “All this will be lost if Biden institutes his bans on U.S. oil and natural gas drilling on federal lands, and the United States has to resort to importing more and more foreign oil to move our economy.”