Industry officials say jobs, economy and tax revenue at stake if Biden delays oil leases
Oil industry officials are raising concerns that a delay in the federal government’s Gulf of Mexico leasing program could cost Louisiana thousands of jobs and hundreds of millions of dollars in economic investment.
An industry study released Tuesday says the Biden administration’s expected delay in the five-year program could cost the state up to 14,000 jobs and $165 million in state tax revenue.
The study, prepared by Energy and Industrial Advisory Partners, a national banking and consulting firm, was prepared for the American Petroleum Institute and the National Ocean Industries Association.
Leaders of both groups said the Interior Department so far has issued no documents or guidance for the next five-year program, in which the federal government sells companies the right explore for and potentially produce oil in sections of the Gulf.
Federal law requires a new five-year program to be in place by July 1, the day after the current one expires.
“We don’t have much hope that they are in the process of completing the five-year plan and scheduling lease sales,” Frank Macchiarola, senior vice president with the American Petroleum Institute, said during a conference call with reporters.
The administration has changed course in the past few weeks, calling for an increase in U.S. energy supply amid rising gasoline prices, Macchiarola said. The high costs have been exacerbated by Russia’s invasion of Ukraine and sanctions that have kept Russian crude oil off the market.
“As the administration continues to talk about the importance of supply, they have a decision right now on their desk to move us toward increasing supply in the United States,” Macchiarola said.
Industry officials say they want two things from the Biden administration:
- Get the next leasing program in place as soon as possible.
- Schedule a Gulf lease sale before the current program expires.
The impact on jobs, government tax revenue and economic investment depend on how long a leasing delay lasts, the study says. Among findings:
- The Gulf is projected to produce an average of 2.6 million barrels per day of oil from 2022 to 2040. A leasing delay would mean nearly 500,000 barrels per day less over that period.
- About 370,000 American jobs are supported by Gulf oil and gas production. Nearly 60,000 of those could be lost without a five-year program.
- On average, $1.5 billion per year in government revenue could be lost with reduced offshore production.
- A delay could reduce the $900 million per year of oil and natural gas revenue allocated to the federal Land and Water Conservation Fund, which supports parks, conservation and recreation efforts across all 50 states.
- Louisiana has the most at stake among states, with $1.3 billion in economic activity and $165 million in state tax revenue expected over the five-year period.
The oil industry and the administration have been at odds since before the president took office in January 2021. Biden enacted an indefinite ban on oil and gas leases within a month of his inauguration, following through on a campaign promise to end Gulf leasing to help wean the nation off fossil fuels that contribute to global warming.
A judge overturned the temporary ban after Louisiana and other states sued, contending Biden overstepped his authority to take such an action. Earlier this year, a judge rejected plans to hold a Gulf lease sale, saying the administration violated a federal law requiring it to account for its impact on greenhouse gas emissions.
The end result, industry officials noted Tuesday, is that the Biden administration has not issued a new Gulf oil lease since he took office.
Paul Danos, president and CEO of the oilfield-services company based in Gray that bears his family name; and Chett Chiasson, executive director of Port Fourchon, an industry service hub for the Gulf, said Biden’s actions and rhetoric impact people’s livelihoods in south Louisiana.
“Ending or reducing lease sales in the Gulf of Mexico will increase carbon emissions, send jobs overseas, increase the cost of energy for Americans and take away the largest source of funding to restore and protect our Louisiana coast,” Danos said.