Since President Joe Biden took office, energy prices have been on the rise. Between his proposed ban on all new oil and gas development on federal lands and new punitive tax measures on energy tucked into the reconciliation bill, our country’s energy security and environmental goals are under threat.
In September, crude oil prices topped $80 for the first time in eight years, and prices at the pump continue to climb across the country. Unfortunately, many predict our situation will get worse before things get better, especially as we head into the winter months. It’s a global energy crisis that should give pause to our leaders focused on fast-tracking policies to promote lower-carbon energy.
As the Wall Street Journal recently put it, “The situation has laid bare the fragility of global supplies as countries drive to pivot from fossil fuels to cleaner sources of energy…” If this crisis articulates one thing, it’s that energy demand isn’t going away. So can we really afford policies like new fees and fresh limits on access to domestic resources that will impact energy availability and costs even more?
For starters, the reconciliation bill includes a methane provision that will levy new taxes and fees on oil and gas companies – which would undoubtedly result in higher energy costs for all Americans. While a fee is difficult to implement and costly, a better approach would be addressing methane emissions through cost-effective, measurable industry action. The proposed methane fee is so egregious that nineteen state attorneys general recently wrote to Senate leadership to raise concerns about this provision. They particularly worried that “by limiting the tax to the oil and gas sectors, this present bills invite mission creep. Agricultural operations, landfills, and coal mining produce methane, too.”
Regarding oil and gas development on federal lands, the laws of basic economics dictate that when the supply of something becomes scarcer, prices will naturally increase. By taking federal lands out of the equation, President Biden will effectively cut off access to a resource that accounts for 22 percent of total domestic oil production in the United States. By doing this, we will be creating an artificial shortage that forces us to be more dependent on foreign nations like Russia and other adversarial countries to provide our energy supplies. Mr. Biden has already had to turn to ask OPEC members to increase their oil production to make up for our losses. They ultimately declined to increase output, driving our prices up even more.
Offshore oil and gas development in the Gulf of Mexico, which accounts for 15 percent of all U.S. oil production, would be hit especially hard by restrictive federal policies. More than $223 million in revenue and 200,000 jobs could be lost due to this policy.
My home state of Florida has, for the most part, been insulated from these economic losses. Still, it is only because we have missed out on these economic gains from energy development altogether. For many years now, any oil and gas development offshore from the Sunshine State has been banned. And while our economy has enjoyed a robust recovery from the effects of the COVID-19 pandemic, the state could be 230,000 jobs stronger and $18 billion wealthier annually should the moratorium be lifted.
Also worth considering are the ancillary benefits of energy development on federal lands. More than $1 billion has been directed to conservation programs in Florida from the Department of Interior’s Land and Water Conservation Fund. In fact, the Interior Department announced energy revenue distribution to the four offshore Gulf oil and gas producing states, including Alabama, Louisiana, Mississippi and Texas, totaled nearly $249 million in 2020. These funds are primarily provided from the revenues from offshore leasing off federal lands and waters for oil and gas development. Yet while some allege that energy development offshore could affect Florida’s tourism industry, it is the money from these very activities that are helping to preserve and protect the state’s outdoor and recreation economy.
The solution is for both Mr. Biden and Congressional Democrats to abandon policies that limit federal leasing and strip punitive tax and policy measures on energy from the reconciliation bill.
These types of policies will only prevent America from quickly getting back on sound energy and economic footing as we try to navigate this global energy crisis.
Policies that embrace our nation’s energy resources and support all the above approach to energy security are critical to communities throughout the country. A balanced approach that takes into account our energy needs and protects our environment is possible, and it is something we should all strive for.
• Mike Hill previously served in the Florida House of Representatives and was a member of the Agriculture and Natural Resources Subcommittee for the Appropriations Committee.