Triple Whammy: Interior Analysis Finds Cutting Offshore Leasing Would Reduce Supply, Hike Prices, and Increase Dependence on Foreign Oil
An E&E News analysis of the U.S. Department of Interior‘s proposed 5-year National Outer Continental Shelf Oil and Gas Leasing Program finds that if the Biden administration followed through on its threats to reduce or eliminate offshore leasing, it would cause negative effects for consumers and American energy security.
As E&E News writes:
“The Biden administration estimates that slashing offshore oil sales would both increase the amount of crude the U.S. buys from other countries and depress oil demand by hiking fuel prices, validating a common industry criticism of climate policy.” (emphasis added)
Let’s break that down. Reducing offshore leasing would 1) increase U.S. dependence on foreign oil, 2) decrease needed energy supply, and 3) hike prices for consumers already struggling at the gas pump or nervous about heating their homes in the coming winter. So where is the win?
In the draft analysis, Interior acknowledges these shortcomings, explaining that increased energy prices and reliance on foreign oil are possible:
“In the transition to a net-zero emissions future, demand for natural gas and oil would not disappear immediately or completely. …Further, reduced leasing doesn’t affect demand so much as it affects price, the agency said.” (emphasis added)
Reminder: the first year and a half of Pres. Biden’s tenure was marked by no new oil and natural gas lease sales on federal lands. The only sale to take place offshore – Gulf of Mexico Sale 257 – was vacated by a judge, a decision which the Justice Department didn’t even appeal. And this summer, for the first time in history, the administration let the existing 5-year offshore leasing program expire without a finalized plan in place. The draft plan that was released in July contained an option for no new leasing at all at a time when energy prices have been volatile.
“When we are talking about our five-year plan and our job at the Interior, we don’t take cost into consideration in that respect, because we’re focusing on managing our natural resources.” (emphasis added)
However, consumers are certainly considering energy prices. In the same reporting from E&E News, analysis from Pete Erickson, director of the climate policy program at the Stockholm Energy Institute, explained how restricting access would impact lower income citizens the most:
“Although cutting oil use by increasing prices may seem effective in terms of forcing an energy transition, he warned that higher costs affect people with lower incomes most, as well as the countries with higher percentages of people under the poverty line.”
Bottom Line: The Interior’s own analysis finds that significantly reducing offshore oil and gas leasing would have negative effects on the economy and consumers. Furthermore, relying on foreign oil, which is proven to be higher in greenhouse gas emissions, would run counter to the very climate goals the Biden administration has proclaimed. Instead of blocking greater oil and natural gas production, the administration should encourage it, so the United States can continue to be a leader and exporter of clean, affordable energy.