President Biden has dealt a major blow to energy independence with his executive order banning new oil and gas development on federally owned territory. Consumers will become increasingly reliant on imported oil from Russia and the Middle East as American energy development stalls.
Ironically announced during a week beginning with the stated theme of “buy American,” the fracking ban’s biggest winners are the country’s adversaries and competitors. Russia and OPEC members will seize the opportunity to strengthen their positions in the global energy market.
In March of last year, Russia sought to leverage the steep drop off in oil demand caused by the Coronavirus outbreak to recapture global market share. Moscow launched an oil price war with the Saudi-led OPEC cartel aimed primarily at drowning U.S. shale oil companies that rely on higher crude prices to break even. In doing so, Vladimir Putin hoped to take back Russia’s role as the world’s largest oil producer — a role that Russia lost to the United States under the Trump administration. But Putin’s gamble failed. Russia ultimately accepted larger production cuts than were offered before the price war started. Despite oil prices trading below $0 for the first time in history, and an estimated loss of 107,000 oil and gas jobs, the American oil and gas industry pulled out of a nosedive. At the end of December 2020, the oil and gas industry was on track to replace nearly 80% of jobs lost by 2022.
Then, with the stroke of a pen, Biden did more to curtail domestic energy development than a hostile foreign actor could dream of. According to a recent study from the American Petroleum Institute, Biden’s action will cause net imports of crude oil to increase by 2 million barrels per day, directly increasing our reliance on foreign oil. Additionally, expenditures on net imports of oil paid to foreign energy suppliers will rise to over $500 billion. The ban’s impact on the overall economy could cost nearly 1 million jobs by 2022.
Even officials within the Biden administration have been forced to acknowledge the economic consequences of the executive order. Biden’s own Energy Secretary nominee Jennifer Granholm admitted during her confirmation hearing that “jobs might have to be sacrificed” to enact the federal fracking ban. When asked during the rollout of the moratorium what his message would be to oil and gas workers who will “see an end to their livelihoods,” Biden’s climate czar John Kerry coldly suggested they “go to work to make the solar panels.”
Of course, Democrats sell the negative consequences of the federal fracking ban as necessary trade-offs required to combat the “existential crisis” of climate change. But Biden’s drilling moratorium is intended to be a virtue-signaling gesture toward the Democratic base rather than a serious effort to reduce greenhouse gas emissions. A 2016 report from the Obama-era Department of Interior concludes that “America’s [greenhouse gas] emissions will be little affected by leasing decisions” and could even increase emissions as “oil production overseas is more [greenhouse gas emission]-intensive than production on the U.S. [Outer Continental Shelf].”
The notion that Biden’s leasing ban is serious climate policy is further undercut by the administration’s excluding higher-emitting coal from the moratorium. The final executive order also provides a carve-out for tribal groups from the executive order, a provision included only after an oil-producing tribe in Utah last week asked the Interior Department for an exemption from the ban.
These last-minute reversals reveal how Democrats prioritized political power over policy when crafting the Executive Order. To Democrats, climate change is a “crisis” that must be solved, just not at the expense of West Virginia Sen. Joe Manchin’s support or that of a key Democratic constituency. Biden is pummeling oil and gas sector workers. Doing so may win him points with the left flank of his party, but it comes at the high cost of energy independence. Putin and OPEC must be smiling.
Mike Palicz is the federal affairs manager on energy policy at Americans for Tax Reform
