The Department of the Interior on Jan. 4 released the draft of an Outer Continental Shelf oil and natural gas leasing plan that would dramatically reverse the current plan put in place by the Obama administration.
According to the department, the plan “proposes to make over 90 percent of the total OCS acreage and more than 98 percent of undiscovered, technically recoverable oil and gas resources in federal offshore areas available to consider for future exploration and development,” from 2019 to 2024. By comparison, the Obama plan for 2017 to 2022 puts 94 percent of the OCS off limits.
{mosads}Interior’s new plan would open 25 of the 26 planning areas in the Gulf of Mexico, Pacific, Atlantic, Alaska Pacific, and Alaska Arctic and would conduct 47 lease auctions, which would far exceed the number in any previous five-year period.
It is now abundantly clear that President Trump was not making empty campaign promises when he talked about establishing U.S. energy dominance. This is “drill, baby, drill,” and then drill some more.
The draft plan, however, is only the first step in a planning process that will take several years to determine which areas will actually be opened and which lease sales will be held.
A public comment period to prepare a draft Environmental Impact Statement began Jan. 8, and public meetings will be held around the country to solicit comment starting on Jan. 16.
The process will give opponents plenty of opportunities to build public resistance and, after the plan is final, to file lawsuits. The usual environmental pressure groups are not the only ones who oppose increased offshore oil production. Ten of the eleven governors of Atlantic and Pacific coastal states and most of their congressional delegations will work to have areas off their coasts taken out of the plan. Maine’s Republican Gov. Paul LePage is the only supporter among the Atlantic governors.
In Florida, Republican Gov. Rick Scott has already announced that he will fight to keep drilling away from Florida’s Gulf and Atlantic coasts in order to protect his state’s tourist industries. He will receive powerful support from Florida Sens. Marco Rubio (R) and Bill Nelson (D).
Offshore oil production would be more popular in these states if the federal government shared royalties with them. Oil and gas royalties of 12.5 percent from production on federal lands have been shared with states under the Mineral Leasing Act of 1920. Royalties from new production in the Gulf of Mexico have been shared with Louisiana, Texas, Mississippi, and Alabama for the past decade.
Congress should pass legislation to extend royalty sharing to all coastal states. It seems to me likely that the prospect of tens of billions of dollars of new revenue would eventually change even the minds of California’s elected officials.
It is being argued that low oil and natural gas prices mean that there will be little interest in bidding for exploration leases in 2019 and beyond. The costs of producing oil offshore are simply too high to compete with onshore conventional and shale production. If that is true, then opponents can relax now.
It’s funny that the opposite argument was made two decades ago. When President Bill Clinton vetoed legislation to open a small portion of the coastal plain of the Arctic National Wildlife Refuge (ANWR) to oil exploration in 1995, one environmental group argued that opening ANWR wouldn’t do anything to lower gasoline prices, which were then high, because it would take 10 years for the oil to start flowing.
My view is that we should expect our elected officials to think more than a few months ahead. That is what the Congress did last month when it included opening ANWR in the tax cuts bill, thereby concluding a 40-year debate, and this is what Interior Secretary Ryan Zinke is doing with the new offshore plan.
The shale oil and gas revolution has already changed the global energy balance of power. The United States is now the world’s number one oil and gas producer. This has added hundreds of billions of dollars to our economy, cut the trade deficit, and reduced the global influence of Russia and Saudi Arabia and its fellow OPEC members.
On top of the shale revolution, Trump’s audacious energy dominance agenda will extend and intensify these trends. Abundant domestic supplies of coal, oil, and gas mean that the U.S. will have a significant energy price advantage over most other countries. Investment in energy-intensive manufacturing industries will boom as hundreds of thousands of high-paying working-class jobs are created.
However, the benefits of an energy price advantage will not be equally distributed. California and most of the northeast states have embarked on plans to cut drastically the use of fossil fuels and thereby raise energy costs in order to reduce greenhouse gas emissions. The states that can take advantage of lower energy prices are the heartland states that mostly voted for Trump for president.
Myron Ebell directs the Center for Energy and Environment at the Competitive Enterprise Institute.