Energy & Environment

The ‘Temporary’ Biden Pause on Fossil-Fuel Leasing on Federal Lands

Pumpjacks in an oil field in Midland, Texas. (Nick Oxford/Reuters)
The only purpose served by the infliction of this cost upon the economy is ideological.

During the presidential campaign Joe Biden offered the utterly incoherent promise to ban “new oil and gas permitting on public lands and waters.” Soon after assuming the presidency, however, he stated clearly that “we’re not going to ban fracking” and, presumably, other forms of fossil-fuel production on federal lands. So, which is it? Answer: The “ban” will not be formal, but very real nonetheless.

A news report from January: “President Joe Biden continues to reshape the US oil and gas industry during his early days in office, moving to introduce a temporary ban on new lease sales across federal lands and waters as part of a wider-ranging sweep of climate actions.”

A news report from April 21: “The U.S. Interior Department is cancelling oil and gas lease sales from public lands through June amid an ongoing review of how the program contributes to climate change, officials said Wednesday.”

First, there is no need to “review” how the federal leasing program contributes to (anthropogenic) climate change. If implemented immediately, the entire Biden “net-zero” proposal would reduce global temperatures by 0.173 degrees C by 2100 — an analytic result using the Environmental Protection Agency’s climate model under assumptions that exaggerate the effects of reduced greenhouse-gas emissions. (An immediate greenhouse-gas-emissions cut by China of 50 percent: 0.184 degrees C.) The climate effects of a ban on new leases on federal lands would be undetectable given the standard deviation of the surface-temperature record.

But that is not the central issue attendant upon the Biden federal leasing policy. The “temporary ban on new lease sales” now has been extended until July at the earliest, and no informal statement or formal policy proposal published in the Federal Register proscribes an endless series of such extensions of the “temporary” ban. Given the obvious primacy of climate politics in the Biden administration — have the proponents of the “climate crisis” view lost any internal policy battle thus far? — it is far from obvious that the leasing program will be renewed.

After all, why would Mr. Biden or any member of his administration choose to bring leftist opprobrium upon themselves? The administration perceives one of its central political vulnerabilities to be the employment impacts of both its leasing pause (or ban) and the broader Biden “net-zero” proposals. And so the administration now argues — and has deluded itself into believing — that massive subsidies for unconventional energy projects can shield workers and households from those adverse effects. That is an illusion, and in any event ignores the broader adverse employment effects of significant and artificial increases in energy costs for the economy as a whole. Nonetheless, that is their story, and they’re sticking to it.

It is likely, therefore, that the “temporary” leasing ban — ostensibly intended to allow for a “review” of the attendant effects on “climate change” — in reality will be extended time and again, yielding de facto the ban that the administration denies vociferously is under consideration. Congress enacted the Mineral Leasing Act in 1920, directing the Department of the Interior to implement the leasing program for fossil resources on federal lands. Has Congress changed its mind?

The answer is “no.” No law has been enacted authorizing a long-term ban on fossil-energy leasing on federal lands, whether or not disguised as a series of “temporary” “pauses” during which the administration can find excuses to pursue its ideological agenda. Properly understood, the forthcoming series of temporary interruptions of the leasing process is lawless — a new manifestation of the growing tendency of administrations to ignore the constitutional mandate that the laws be faithfully executed. That is the real problem posed by the Biden leasing ban, blatant even if implemented surreptitiously: It represents yet another attack on the rule of law, and an erosion of the fundamental power of the Congress to decide policies.

The production of natural resources represents an increase in national wealth, the division of which under market competition is driven by contributions to productivity, including the value of public services provided. A leasing ban, accordingly, will impose losses upon a large number of market participants generally, and upon state and local governments in particular.

For the period between 2008 and 2018, oil production on federal lands grew at an annual rate of about 4 percent, while gas production fell at about the same rate. Weighted by the value of production (oil was about 84 percent of the $74.4 billion total), the combined oil/gas-production growth rate was about 3.4 percent. Let’s assume that the value of such production on federal lands would increase by 3 percent per year in real (inflation-adjusted) dollars in the absence of a federal ban on new leasing and drilling. The ban would thus reduce the value of oil and gas produced on federal lands by about $2.2 billion per year; if permanent, the ban would reduce national wealth by the present value of that lost stream of production, or about $45 billion.

Fossil production from federal lands is roughly 8 percent of all U.S. production of fossil fuels. Annual U.S. greenhouse-gas emissions from fossil fuels are about 5.1 billion metric tons; 8 percent of that is about 400 million metric tons, out of global emissions of about 53 billion tons. Again, the administration is justifying the leasing “pause” on climate grounds, but that is preposterous: The effect on climate phenomena would not be detectable. The only purpose served by the infliction of this cost upon the economy is ideological.

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