Friday, September 8, 2023

A knockout punch for oil?

Jack Spencer, The Daily Signal

Just last month, President Joe Biden took a major swipe at America’s energy independence when he declared nearly a million acres of uranium-rich land outside of Grand Canyon National Park off limits to energy development.

Turns out that was just the setup jab.

The knockout punch is on its way.

According to reports, Biden wants to cancel drilling leases in the Arctic National Wildlife Refuge, or ANWR, which would deny Americans access to around a total of 11 billion barrels of oil (though it could be much more).

That is a lot of oil.

Canceling drilling when Saudi Arabia continues to cut production makes even less sense. That’s because this decision will continue to chill gas and oil development in the United States, meaning that Americans will not only lose this oil but the oil production that is forgone because of the political environment Biden has created.

No company, after all, will risk the massive amounts of capital necessary to develop new energy resources when the government can swoop in and shut you down.

Like with the uranium decision, this announcement will most assuredly be cast as necessary to protect the environment. This is diversion politics at its worst. The truth is that while ANWR is about the size of South Carolina, the actual land open for development would be much, much less. According to one industry analysis, surface operations would take up only around 2,000 acres.

More importantly, however, is that developing gas and oil is nothing new in the region. In fact, the American gas and oil industry has a strong record working along Alaska’s coastal plain, having safely produced around 18 billion barrels of oil since production began at Prudhoe Bay in 1977.

Then there will be claims about how stopping this oil development is necessary to fight global warming. The truth is that even if one were to take the climate alarmist claims as fact, the amount of carbon dioxide saved by not using this oil would be almost zero.

First, just because Americans don’t have access to this domestic source of oil doesn’t mean that they will not still demand oil. It will just likely have to come from somewhere else and be more expensive. The CO2 is still going to be released.

Even if not producing the oil in ANWR somehow led to oil not being used in the aggregate, the amount of CO2 saved would be meaningless in global warming terms. The Heritage Foundation’s chief statistician, Kevin Dayaratna, has investigated exactly this point using the same models government agencies use. He found that eliminating all U.S. greenhouse gas emissions would reduce temperatures by less than 0.2 degrees Celsius by the year 2100. In other words, this oil has literally no meaningful impact on world CO2 levels.

That said, taking these resources offline will have a meaningful economic impact—a very harmful one—in Alaska and in the broader United States. First, gas and oil development is a critical sector for Alaska’s economic health.

The industry supports nearly 50,000 Alaskan jobs, accounted for 35% of the state’s economy at $19.4 billion, and generally provides nearly 90% of the Alaskan government’s general fund, putting over $180 billion in the state’s coffers since Alaska became a state in 1959.

Opening ANWR would not only create more jobs and more revenue for Alaskans but also have a real impact on the rest of the country—with some estimates suggesting up to 77,000 jobs created and $40 billion in additional economic activity, though estimates vary.

But losing out on tens of thousands of jobs, billions in economic activity, and lower prices at the pump is not why this decision could be a knockout punch for American families and businesses. It is because of the chilling effect it would have on the American energy industry.

Why are gas prices stubbornly high?

It’s because Biden is doing exactly what he said he’d do when he guaranteed on the campaign trail that he would “end fossil fuels.” Since Day One in office, Biden has been making developing gas and oil resources difficult to impossible, and less oil means higher prices.

It’s that simple.

No one should be fooled the next time Biden lashes out about high gas prices. He’ll blame Russian President Vladimir Putin, the oil companies, and even mom and pop gas stations. But the truth is that the blame lies squarely with Joe Biden. (Sept 6, 2023)

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