EnergyFederalJoe Biden’s Plan to Sunset Federal Drilling Permits Could Eliminate 120,000 Texas Jobs

Biden’s proposal consists of prohibiting approval of new or up-for-renewal leases by oil and gas companies to drill on federal land or waters.

As of 2019, 582 drilling leases on 350,000 acres of Texas existed.

The analysis by the American Petroleum Institute (API), the Texas Oil & Gas Association (TXOGA), and the Louisiana Mid-Continent Oil & Gas Association states that 22 percent of the nation’s total oil production and 12 percent of its natural gas production comes from federal land-based operations.

The study projects a 44 percent decrease in American crude oil production and a 68 percent decrease in natural gas production in 10 years without federal leasing.

Biden said he wouldn’t cancel existing leases, but once they expire, would prohibit their renewal. Most drilling permits last five to 10 years, and so, few in place now would last through a hypothetical eight-year Biden administration.

Thanks in large part to Texas’ prolific energy emergence, the U.S. has become far less reliant on foreign energy. However, contrary to many politicians’ claims, the country is still not “energy independent” as certain areas rely on imports out of efficiency.

But the analysis projects the U.S would spend $57 billion more in 2030 on energy imports and that Americans collectively would see their residential energy spending increase by $19 billion.

Texas, specifically, would lose out on $65 million in revenues over the next decade. That’s especially important within the context of the state’s mounting financial concerns caused by the pandemic-driven economic downturn.

It also predicts a $700 billion reduction in America’s gross domestic product in 10 years — a three percent decrease.

According to the Energy Information Administration (EIA), Texas ranks fifth for energy expenditures per capita and sixth among states in consumption per capita.

Because of its production prowess and infrastructure efficiency, Texas ranks 33rd among U.S. states for average retail price of electricity at 11.98 cents per kilowatt-hour.

Tying imports and energy costs together, the study’s assumption is that if federal land drilling is phased out, Texas, and the U.S. overall, will have to import oil and gas from elsewhere. 

That is certainly a realistic assertion, but on Biden’s plans own terms, he hopes to reach carbon-neutrality by 2050 and so, simply supplanting domestic fossil fuels with foreign-purchased ones will do nothing to help reach carbon neutrality. In fact, it’ll increase the carbon footprint just due to emissions from transportation of the fuel sources.

That would require leaning more heavily on renewable sources such as wind and solar, which Texas is proficient with compared to other states. But the increased reliance on such sources has led to the rolling grid blackouts in California the last few weeks.

Texas is immensely different from California, but such top-down directives would reduce that divergence, putting the entire country in closer proximity to California-like energy policy. But the other assessment made by the study is that to compensate, the U.S. would move back toward coal-based electricity which is both less efficient than oil and natural gas, but also produces higher emissions.

Emissions in the U.S. have increased far less significantly than production — 3.7 percent to nearly 20 percent, respectively — over the last 30 years in large part because of a transition away from coal and toward natural gas.

Over half of the electricity on Texas’ grid comes from natural gas and is a big reason why its emissions increase is not proportional to its production prowess.

Nationwide, the API study estimates an annual reversion to coal power, reaching a 15 percent increase in coal use at the end of the decade. The study estimates this reversion back toward coal generation will amount to a five percent increase in CO2 emissions from the power sector.

Furthermore, they estimate because of the increased cost combined with the effects of job losses, incomes per household would decline by an average of $366 per year.

The estimated jobs lost permanently amount to 436,000, of which Texans would account for 27 percent. Biden has compensated in his rhetoric for these and other energy industry job losses that would accompany such drastic changes in the economy with a vague plan to revamp infrastructure.

Specifically, his plan accounts for 250,000 jobs created by a federal initiative to plug unused oil and gas wells. Only a fraction of those would be in Texas as other states, notably Pennsylvania, rely heavily on fracking and drilling, too.

But retraining a workforce would cost even more and it’s unclear whether that is accounted for in Biden’s policy map.

While Biden is not in favor of a total fracking ban, like Vermont Senator Bernie Sanders, his proposed phasing out of federal land- and waters-based drilling would still significantly reshape Texas’ and the country’s economy, energy industry, and the livelihoods of those who rely on cheap, affordable, reliable energy.