A campaign pledge by Joe Biden to ban new oil and gas development on federal lands and a Department of Interior plan to grant leasing opportunities in Alaska’s wildlife refuge have reignited the debate about the role of energy development on public lands.
Federal leasing is the process of lending public land to private companies to develop and access natural resources. In exchange for use of these lands, private companies pay both a per-acre rate decided at auction as well as a royalty on any raw materials extracted from the land. The Bureau of Land Management (BLM), which oversees the program, then splits these revenues between the state where the activity occurs and the U.S. Treasury.
In 2019 Federal lands accounted for 22% and 12% of oil and gas production, respectively. The BLM’s “A Sound Investment for America 2019” report established that in 2018 oil and gas activity on BLM-managed land generated $71.5 billion in economic output and supported 300,000 jobs, as well as set a record for oil production on federal land. While more than 214 million barrels of oil were produced on 25 million acres of energy development, the industry simultaneously was able to leave the smallest footprint on federal land since the current system of measuring was implemented. Ending these leases will jeopardize the great strides that have been made in environmentally conscious energy development and would effectively gut an industry that has had quantifiable economic benefits nationwide.
As we work to recover from the economic fallout of the COVID-19 pandemic, we must be careful not to adopt policies that undermine an industry that has bolstered the economy of many states, including Colorado, and is the source of millions of well-paying jobs. A recently released American Petroleum Institute analysis found that Colorado has the sixth-largest reserves of natural gas in the United States, and along with Wyoming and New Mexico, accounts for 88% of all natural gas produced on federal lands. Should a federal leasing ban go into effect, total natural gas production in Colorado will decline by as much as 12% by 2030. This not only jeopardizes the benefits Colorado has enjoyed as a result of the energy revolution but will impede energy markets nationally.
The economic impact meanwhile could be disastrous. That same report found that America’s GDP could decline by a cumulative $700 billion by 2030 and nearly 1 million jobs could be lost by 2022. Consumers would be hurt by the restricted supply of low-cost energy sources, paying $19 billion more in residential energy costs by 2030, and an increased reliance on foreign energy sources would undermine American national security.
Colorado would feel the pain even more acutely than many other states. In 2017 alone the oil and gas industry added some $13.5 billion to Colorado’s gross domestic product (GDP) and every year the industry contributes nearly $1 billion in direct state and local taxes. Losing the ability to develop energy resources on federal lands in Colorado could jeopardize 18,000 jobs and as much as $108 million in state revenue.
Ironically, Coloradans would bear these heavy economic costs to no avail. Limiting natural gas development on federal lands would actually adversely affect the decarbonization efforts advocates aim to support and only delay the transition to renewable energy. From 2010 to 2018 as the amount of electricity in Colorado generated by natural gas increased by 67%, emissions from sulfur dioxide (SO2), nitrogen oxide (NOx) and carbon dioxide (CO2) fell by 18% to 75%. Considering the ability to quickly bring natural gas-fired electricity turbines on and offline, these plants also serve as a critical backstop for less reliable, renewable forms of energy.
Those who are concerned about solving the global climate issue are misguided in advocating for a blanket ban of energy development on federal lands. Not only would it fail to accomplish its stated goals, but the economic consequences of such a decision would also be felt by American families and communities across the United States. The best outcome for Colorado and the United States is to say no to a federal leasing ban.
Ken Summers, a Fort Collins Republicans, previously served in the Colorado House of Representatives and for two years served as the chair of the House Health and Environment Committee.