By Sophie Mangassarian
On Jan. 27, 2021, President Biden issued an executive order titled “Tackling the Climate Crisis at Home and Abroad,” which calls for a government-wide approach to addressing climate change. Included in the order is a pause on new oil and gas permitting and leasing on federal lands and offshore waters. While some see President Biden’s executive order as a step toward establishing the United States as a global leader in climate policy, many in the oil and gas industry are concerned that the action will raise oil prices and kill jobs.
The executive order states that the moratorium on oil and gas leasing is meant to give the Department of the Interior time to review the leasing program and ensure that it best serves the public interest. This review will also consider whether to adjust royalties associated with coal, oil, and gas resources, and to account for corresponding climate costs: externalities associated with the production of carbon-heavy energy sources.
House Republicans have come out in full force against the order amidst concerns that it will result in massive displacement of the oil and gas industry and the impacts it will have for jobs. U.S Rep. Lauren Boebert has already introduced a bill opposing the moratorium, the “Protecting American Energy Jobs Act,” citing concerns over job losses and dependency on foreign countries for natural resources.
Biden’s executive order outlines a push for creating jobs in manufacturing, engineering, and skilled-trade careers that will help create new American infrastructure and a clean energy economy; not only for young workers, but also for older workers shifting to new professions and for communities “too often left behind” due to economic shifts. Several communities in Colorado have been hit hard by declining oil and gas production in the state.
Colorado’s oil and gas production was already slowing down in 2020, due to impacts from the pandemic and a steady decline in production on leased federal lands in the state since 2001. Oil production dropped 13% compared to 2019 numbers – the steepest four-month drop for producers since 2001.
Many in the oil and gas industry in the state fear that a move toward renewable energy and a decline in gas production will cut not only jobs, but crucial funding for schools. In Garfield County, for example, oil and gas production accounts for 25% of the county’s revenue. In 2018, the county received $3 million from federal land leases, but those numbers were expected to drop to around $600,000 in 2020.
Weld County, Colorado, another important area of the state for its oil and natural gas production, has recently started a push to join Wyoming. Some proponents say the plan is due to Colorado’s war with Weld County’s three major economic drivers: “small businesses, agriculture, and oil and gas.” While this move is ultimately unlikely, it represents the divide felt in Colorado over energy production and conservation.
Despite the concerns of oil and gas industry proponents, Aaron Weiss, Deputy Director of the Center for Western Priorities, and Jason Maxey, Director of Weld County’s Oil and Gas Energy Department, believe that Biden’s order will have little impact on oil and gas production unless the administration raises royalty rates.
In a statement to the Denver Post, Brad Handler, a senior fellow for public policy at the Payne Institute at the Colorado School of Mines, said that the near-term impacts of the leasing moratorium will be much less than expected as several companies have been anticipating a pause following Biden’s campaign pledges, and have aggressively acquired permits, leaving enough resources to proceed as normal for four years. According to the Associated Press, most companies have up to two years to act on federal permits, so significant impacts on oil supply are not expected; the order could, however, result in a shift in production to private or state-owned land, which would decrease royalty rates.
It is too early to know how long Biden’s oil and gas leasing moratorium will last and how it will ultimately affect the oil and gas industry in Colorado. There is also uncertainty around how much an increase in renewable energy production will impact oil and gas demand nationwide. What we do know is that the issue of public lands and energy production continues to divide Coloradans in the wake of a state-wide transition to cleaner energy and public health concerns over the production of oil and gas. Leadership from both the Biden administration and state government will be critically important to creating and maintaining jobs, supporting workforce training, and to relieving tensions felt across Colorado.