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Bans on oil, gas development on federal land could be ‘catastrophic’

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Some folks in the western part of the country hope certain campaign promises are let to slide.

A ban on oil and natural gas development on public lands by President-elect Joe Biden would severely harm the economies of eight western states, especially New Mexico, according to a study released Monday.

After discussing the report with the News-Sun, state Rep. Larry Scott, R-Hobbs, had one word to emphasize his concern.

“If a federal ban is effected, the economic consequences to our community can be described in one word and that is ‘catastrophic,’” Scott said. “To follow that up, the economic consequences to the State of New Mexico will be nearly catastrophic because once the drill bits lay down, the natural production decline takes effect.

“Not only are you missing all the economic activity, gross receipts tax, and payrolls and taxes that come with active work going on, you’ve got production declining because there’s no new resources being developed. The word is catastrophic.”

A Wyoming Energy Authority 52-page study conducted by University of Wyoming Professor Timothy Considine and released Monday takes a look at the impacts of two possibilities — a moratorium on federal oil and gas leases and a ban on drilling on federal land. Considine is a professor of energy economics with the School of Energy Resources and the Department of Economics at the University of Wyoming.

New Mexico, which ranks first in oil production on public lands and second in natural gas, would lose $207.7 billion in gross domestic product over the next 20 years. According to the report, between 2021 and 2024 alone, a drilling ban would eliminate 36,217 jobs per year, $6.3 billion in tax revenue to the state and $9.8 billion in wages.

“Overall, either a moratorium on new federal leases or an outright drilling ban would constitute a significant investment and production shock to the economy of New Mexico, reducing tax revenues, income, and employment,” the study concludes. “Moreover, these policies deprive New Mexico from developing its abundant oil and gas resources in the Permian Basin.”

Extensively citing data and statistics, the report is titled “The Fiscal and Economic Impacts of Federal Onshore Leasing and Drilling Bans.” Available online, the report was completed under a consulting agreement with Wyoming Energy Authority.

According to the report, over the next four years, the human cost of fulfilling Biden’s campaign pledge would be an average of 72,818 fewer jobs per year throughout the eight states. Lost wages would total $19.6 billion, economic activity would decline $43.8 billion, and tax revenues would drop $10.8 billion in Alaska, California, Colorado, Montana, New Mexico, North Dakota, Utah and Wyoming.

By 2040, GDP would decline by $670.5 billion and average annual job losses would exceed 351,000 across the West, the research determined.

New Mexico Oil and Gas Association President Ryan Flynn noted the extreme losses to the state under those circumstances.

“Any proposal restricting oil and gas development on federal lands would devastate New Mexico and result in the elimination of thousands of jobs, massive cuts in support for public education, and a greater reliance on foreign energy imports. Our state depends on oil and gas to fund schools, put teachers in classrooms and help our young children learn,” Flynn said in a news release.

Western Energy Alliance President Kathleen Sgamma focused on the politics of damage to the western states’ economies, threatening a legal battle if either a moratorium or a ban were put in place.

“President-elect Biden has had to face the reality that he can’t ban fracking nationwide, so he’s pledged to ban leasing and fracking on federal lands. A Biden ban would be devastating to the economies of western states by eliminating thousands of jobs just as Americans are struggling to recover from the pandemic,” Sgamma said in the news release.

Sgamma continued, “(Biden is) calculating that he won’t pay a political price while satisfying radical climate activists, but he would be sacrificing the livelihoods of thousands of westerners throughout many sectors of the economy. We hope this report convinces him not to inflict economic pain on westerners. If he makes good on a Biden ban, the Alliance will be in court within hours.”

Flynn noted the successful efforts already made in the oil and gas industry toward allaying environmental concerns.

“With vast stretches of federal land, it is simply impossible to divorce our economic success from land management policy in western states like New Mexico, and funding for education, access to healthcare, and new infrastructure projects are all on the line,” Flynn said. “We are committed to doing our part to reduce emissions and protect the environment, but we cannot slap thousands of New Mexicans with proposals that destroy jobs and ravage communities.”

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