How Biden’s Oil-Lease Moratorium Will Create Jobs
Despite rhetoric from Republicans, the shift toward renewable energy actually brings substantial, nationwide economic benefits—and it'll help the oil and gas industry, too
On Wednesday, President Biden issued executive orders that create a moratorium for new oil and gas leases on public lands, the beginning of a pivot toward renewable energy sources. Despite Republican rhetoric to the contrary, this could actually represent the beginning of a major economic boom.
Relevant to energy, here’s what the new executive orders do:
- Order the Department of the Interior to temporarily halt new oil and gas lease sales on public lands and in public waters. As of this article’s publication, it’s unclear for how long.
- Order the DOI to review the oil and gas leasing program during that pause to ensure it serves the public interest.
- Order the DOI to create a program to develop renewable energy projects on public lands and in public waters.
- Establish a goal of doubling energy production from offshore wind sources by 2030.
- Call for establishing a Climate Conservation Corps that will “put a new generation of Americans to work conserving and restoring public lands and waters, increasing reforestation, increasing carbon sequestration in the agricultural sector, protecting biodiversity, improving access to recreation, and addressing the changing climate.”
- Order the DOI to establish a plan for protecting at least 30 percent of public lands and waters by 2030.
- Order all federal agencies to eliminate fossil-fuel subsidies, as possible within existing law.
What do Republicans have to say about all that? A statement issued by Independent Women’s Voice calls Biden’s actions “misguided,” going on to say that the orders “will kill jobs, raise energy costs, and remove reliable energy sources for American families and businesses.”
Independent Women’s Voice is a right-wing-policy advocacy group funded by the Koch brothers. Its statement calls for a pivot toward natural gas, not renewable energy sources, as the correct way to address climate change. Natural-gas production is a significant source of methane, carbon dioxide, carbon monoxide, sulfur dioxide, and nitrogen oxide emissions. Koch Industries owns billions of dollars’ worth of assets in natural-gas production, distribution, and power generation.
You’ll find nearly identical disinformation parroted word for word throughout Republican media and political spaces. One of the foundational lies in the conservative rhetoric around climate change is that the oil and gas industry is responsible for providing more or better jobs than renewable energy.
During the 2015–16 fiscal year, it’s estimated that America’s green economy—sectors connected to renewable energy and zero-emissions transportation, for example—was responsible for $1.3 trillion in annual sales revenue and employed 9.5 million Americans in full-time positions. During that period, the oil and gas industry’s own numbers claim 10.3 million total employees, but that total includes an unspecified number of part-time jobs. Total economic activity for oil and gas was identical to that of the green economy: $1.3 trillion. Outdoor recreation also relies on public lands to support its economic activity. The Outdoor Industry Association places the size of its workforce at 7.6 million American jobs and says it’s responsible for $887 billion in annual sales.
Yet industrial activity by the oil and gas industry on public lands is heavily subsidized by American taxpayers, creating a fundamental priority within our economy for oil and gas production on public lands. This comes with little to no benefit for those same taxpayers. Leases to drill for oil and gas on federal lands are sold far below market prices—during the Trump administration, 11 million leased acres went for just $1.50 an acre. Regulations governing the activities of drilling operations on our public lands do not currently require polluters to clean up after themselves. Instead, taxpayers are left paying to clean up abandoned wells and all of the contamination left behind. At the same time, other activities like solar and wind power and outdoor recreation do not receive the same priority, limiting the amount of economic activity they’re able to provide to local communities.
While one side effect of heavy taxpayer subsidization on the oil and gas industry is cheap prices for consumers, the amount of money you’re charged at the fuel pump (the current nationwide average is $2.40 per gallon) comes nowhere near the total cost we end up paying. Factoring in taxpayer subsidies and externalities, like illnesses and environmental degradation, the Center for Investigative Reporting estimates that taxpayers are actually shelling out $15 or more per gallon of gasoline. There’s profit in that $2.40, but a lot more in that $15.
Biden is not ordering a halt to oil and gas drilling on public lands, or even a pause on new drilling projects. He’s simply ordering a temporary pause in the sale of new leases so the benefit of them to taxpayers can be fully considered within the contexts of the cost of pollution and climate change. This will not impact existing drilling operations or prevent the oil and gas industry from continuing to grow during this period.
The orders make no mention of fracking or coal leases.
Onshore, the oil and gas industry currently holds 26.7 million acres of leases on public land, 12 million acres of which are not currently in use. That should leave plenty of room for expanded drilling activities during the pause in new lease sales. Offshore, 1,583 drilling-rig leases are idle, while only 378 are active.
Such disparity is explained by a market for oil and gas that currently sees a glut of supply amid demand depressed by the COVID-19 pandemic. By providing a partial correction to that market, analysts predict that the lease-sale pause could actually be good for the oil and gas industry.
“In effect, this policy backdrop is constructive for the oil and gas macro—constraining supply and putting upward pressure on the marginal cost of shale production without impacting shortterm demand,” reads a Morgan Stanley report on the impacts of Biden’s orders. For those same reasons, these policies should not make the United States more dependent on foreign oil.
Still, even opponents of the oil and gas industry concede that halting new lease sales, even temporarily, could be a problem for local communities hoping for new development. “In the short-term, the pause could pose challenges for workers and communities that have powered the nation for generations—unless the President pairs it with programs and investments,” reads an analysis put together by the National Wildlife Federation. “During the pause, NWF calls on the administration to assess how communities and state budgets that are already struggling under a market downturn can make a just transition to a clean energy future.”
Biden’s orders call for exactly such an investment in those communities. “Plugging leaks in oil and gas wells and reclaiming abandoned mine land can create well-paying union jobs in coal, oil, and gas communities while restoring natural assets, revitalizing recreation economies, and curbing methane emissions,” reads the portion of the order calling for investment in communities historically dependent on oil and gas. The executive branch can’t set budgets—only ask for them—but it can set standards on how that money is spent. Part of the order dictates that all jobs created in the federal government as part of this program must be accessible to unionization, including jobs that will build the 600,000 electric vehicles Biden plans to purchase for the federal government.
And there is a way that Biden can devote budgets to communities currently or previously dependent on oil and gas within already appropriated budgets. The orders instruct the DOI to make a plan for a new Civilian Climate Corps within 90 days. This should create new jobs with the purpose of addressing climate change in the near term.
It’s the potential for a permanent pivot away from taxpayer subsidies for oil and gas and toward providing incentives for renewable energy that holds the most promise here. Oil and gas are so profitable and wield so much political power precisely because of those subsidies. Shifting incentives toward industries that can support the goal of net-zero emissions is the most powerful tool our government has in achieving that goal. And Biden has a plan for making sure such incentives deliver value for taxpayers, too. He’s including all actions taken in these orders in his new Buy American directive. Not only will products related to these activities need to be produced in America, but all the jobs created as part of this will have to include the choice to join a union.
Will the price of gas go up? That seems likely. But the point is to deliver an alternative to fossil fuels—one in which the total cost we pay for energy doesn’t involve as much environmental harm. If these plans succeed, you may no longer need to even buy that gallon of gas.
Environmental justice is going to play a role, too. Whereas profits in the oil and gas industry disproportionately go to executives, Biden is ordering that 40 percent of the federal government’s investment in clean energy be spent in the disadvantaged communities that have disproportionately been impacted by pollution and climate change.
How many jobs will these executive orders create? Not many without legislative action to match. As we saw with Biden’s day-one actions, executive orders are easily reversed policies and guidelines, not laws. Laws are created by Congress. But it just so happens that these orders mirror bills already being considered by the House of Representatives. The American Public Lands and Waters Climate Solution Act and the Ocean-Based Climate Solutions Act were introduced by House Natural Resources Committee chair Raúl Grijalva, a Democrat from Arizona, in 2019 and 2020, respectively. On Wednesday, Grijalva announced plans to move both bills forward in Congress.
Biden’s only been in office for one week, but so far he’s followed through on the pledges he made about the environment during the campaign. It’ll take the support of Congress to achieve lasting victories, but with its help, how many jobs are possible? According to Biden’s promises, ten million—the same number of Americans employed by the oil and gas industry. If he can pull this off, Biden is going to prove Republican naysayers wrong and fundamentally pivot the economy in the direction of net-zero emissions and increased equity.