State Chambers: Federal Permit & Leasing Bans Will Hurt Small Businesses

It’s well-documented that a ban on federal oil and natural gas permitting and leasing will have significant impacts across the country. State economic associations from New Mexico, Louisiana and Grand Junction, Co. described just how significant those impacts would be during the U.S. Chamber Global Energy Institute‘s recent public call.

In these regions, local economies and small businesses that have already been impacted by the COVID-19 pandemic and, in the case of Louisiana, Hurricane Laura, rely on the energy industry. As Stephen Waguespack, President and CEO of the Louisiana Association of Business and Industry, explained, the impacts of permit and lease restrictions will be heavily felt in the homes of everyday Americans:

“Louisiana starts feeling the impact at the beginning of the [permit] investment. If a project goes overseas, we feel it drying up right away with the local mom and pop shops.”

This sentiment was echoed by the Grand Junction Area Chamber’s President and CEO Diane Schwenke who spoke of the more than 30,000 people employed by their membership that a ban would impact—particularly those in hospitality that are already struggling from the pandemic. She explained that a federal lands ban “simply isn’t necessary and will hurt my small businesses that rely on the energy sector.”

There will be environmental impacts, but not the ones intended.

As the participants emphasized throughout the call, halting onshore and offshore production in the United States will not halt energy demand, but rather shift demand toward foreign production, potentially negating emissions reduction efforts. The New Mexico Chamber’s President and CEO Rob Black expressed concern over where development would occur if not on the federal land in his state:

“This ban doesn’t reduce energy demand, it just moves where it’s produced and who benefits from it. Will New Mexico’s residents benefit or foreign nations?”

In fact, in the coming years, global energy demand is expected to grow, as was mentioned repeatedly throughout the call. GEI forecasts that America’s energy security risk will stay low if production remains high but decreased domestic output and increased foreign production will have dire consequences far beyond America’s energy security.

Participants on the call shared concerns about how, if the 60-day measure becomes permanent, countries with weaker regulations on greenhouse gas emissions will take the reins on meeting the expected global demand growth.

Energy industry leaders agree that finding a solution to emissions is necessary, but, as Black put it:

“We can walk and chew gum at the same time.”

Panelists stressed that regulators and lawmakers must invite industry leaders to the table in order to develop a bipartisan plan to reduce carbon emissions while not restricting U.S. energy production.

But the environmental impacts also go beyond just potential emissions increases. States like Louisiana rely on the revenue from offshore development not only to pay for education and public services, but to address one of the biggest environmental concerns the state has: coastal restoration. As Waguespack explained, more than one-third of every dollar is used in these efforts within the state:

“This not only hurts our economy and our workforce, but our ability to save our coast.”

According to the Bureau of Land Management, in FY 2019, Louisiana was one of four states that received $353 million in total Gulf of Mexico Energy Security Act (GOMESA) – legislation championed by former U.S. Senator Mary Landrieu (D-La.) – disbursements. This enabled the state to make progress on several projects, including:

$50 million for a permanent gate structure that will prevent flooding to portions of six parishes on Bayou Chene. Once complete, the project will feature a 40-foot barge gate to provide protection against storm surge up to 10 feet, along with a series of flood-walls and levees to support additional protection.

In Ascension Parish, GOMESA will fund $65 million for a project that includes a pump station to be constructed on the Mississippi River at Donaldsonville with a minimum pumping capacity of 1,000 cubic feet per second alongside the existing 500 cfs station, tripling the capacity for fresh water entering Bayou Lafourche to combat saltwater intrusion and provide fresh drinking water to over 300,000 residents in Assumption, Ascension, Lafourche and Terrebonne Parishes.” (emphasis added)

The bottom line is that the impacts of a federal moratorium on oil and natural gas permitting and leasing go far beyond the bottom line of the oil and natural gas industry. There are detrimental consequences on prices, budgets, employment and even the environment in these communities that need to be considered.

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