Presidential Candidate Analysis
Analysis provided by Kevin Book and Jason Isaac
Sparked by growing partisan divide over how the nation should respond to questions about climate and fueled by increasingly strident demands from anti-fossil-fuel activists, America’s energy future has been injected into election-year politics in an unprecedented way. No more is the energy debate concerned merely with determining how to most efficiently, effectively and safely provide the affordable and reliable energy resources necessary to power an industrial society and preserve the American way of life.
Instead, beliefs about energy have taken on near-religious qualities and invoke feelings of right versus wrong; good versus evil. And federal energy policy has morphed into blueprints for everything from social justice and racial equality to economic recovery from a worldwide pandemic.
Caught in the middle is America’s independent crude oil and natural gas industry, which drills 91% of the wells, and produces 83% of the crude oil and 90% of the natural gas that historically have granted Americans unparalleled prosperity and a standard of living envied around the world. At stake in the 2020 presidential election is more than merely what type of laws and regulations will determine the industry’s operating environment, but indeed, to what degree that industry will be allowed even to operate going forward.
The American Oil & Gas Reporter invited the Donald Trump and Joe Biden campaigns to participate in a Q&A “debate” of energy issues, which AOGR has obtained from Republican and Democratic presidential candidates in every election since George H.W. Bush versus Michael Dukakis in 1988. However, neither campaign chose to participate. Therefore, to address questions about what the oil and gas industry may expect from either a Biden or a second Trump administration, AOGR turned to experts in political and economic policy analysis to get their insights into the candidates’ views on a number of topics relevant to U.S. oil and gas producers–from federal regulations to public lands management and tax policy.
Providing responses on how a Biden administration may be expected to deal with various industry issues is Kevin Book, director of research at ClearView Energy Partners LLC. Based in Washington, ClearView provides independent research and analysis of macro energy trends. Since 2009, ClearView has identified and quantified nonfundamental energy risks for investors and corporate strategists by filtering economic catalysts through political constraints.
Providing the perspective on how a second Trump administration may deal with oil and gas industry issues is Jason Isaac, director of Life: Powered, a national initiative of the Texas Public Policy Foundation to raise America’s energy IQ. Headquartered in Austin, TPPF is a nonprofit, nonpartisan research institute dedicated to promoting and defending liberty, personal responsibility and free enterprise.
The answers to follow are from the expert participants, and do not come from the candidates’ campaigns.
Numerous studies demonstrate the clear correlation between energy consumption and economic progress as well as quality of life. America has been blessed with abundant natural resources as well as technological advances in alternative energy sources. What overarching goals do you see driving a (Biden/Trump) administration’s energy policies?
Because energy supports many policy priorities, it can be difficult to cite just one presidential organizing principle of energy policy. We think Biden’s priorities likely are to be decarbonization and energy transition, rather than energy independence or export-focused energy dominance.
Two targets stand out: “net-zero” (zero carbon emissions) power generation by 2035; and 500,000 public electric vehicle (EV) charging stations. Both imply radical change to the fossil-fueled, stationary and mobile-source status quo. That implies green power and clean cars.
But we see Biden pursuing multiple pathways to those destinations, including strict rules governing the production and use of fossil fuels, expanded green technology fiscal incentives, and new mandates requiring alternative technologies.
We need to stick to the “all of the above” philosophy with regard to energy and let the free market, not the heavy hand of government, determine our sources and uses of energy. The American people should be allowed the freedom to use the energy that is most affordable and the most reliable, both for the benefit of our way of life and the environment.
The Trump administration realizes that energy is a critical asset, playing a pivotal role in our national security, public health, economic growth, quality of life and environmental protection. We cannot risk playing Jeopardy with the American people’s tax dollars and their future by propping up unreliable energy technology, which often is pursued with good intentions, but backfires by increasing the cost of living and worsening poverty.
Our nation is blessed with an abundance of oil, natural gas and coal–the fuels that have driven unprecedented prosperity and created the safest, healthiest, freest society in human history. The nation needs to pursue the most economical and environmentally safe way to use these abundant natural resources.
In its 2020 Annual Energy Outlook, the U.S. Energy Information Administration projects U.S. consumption of both crude oil and natural gas will continue to rise through 2050. Do you think (Biden/Trump) believes American interests are best served by meeting domestic energy demand with domestic production, to the extent possible, and if so, what policies do you think his administration might recommend to ensure an adequate supply of both crude oil and natural gas?
Pennsylvania is important for Biden’s election bid, and not only because he was born there. The state holds 20 Electoral College votes toward the 270 it takes to win the presidency. While the state supported President Trump in 2016, Biden has maintained a narrow but significant lead throughout the 2020 cycle.
Biden may be treading lightly on the state’s oil and gas interests out of electoral caution. He also is speaking there a lot. On Aug. 31, Biden clearly emphasized that he would not “ban fraccing.” On Sept. 17, he called oil and gas “an important business.”
From our perspective, an outright fracturing ban is somewhere between impracticable and illegal. A Biden presidency could pose many risks to the sector, but probably not that one. And Biden’s affinity for U.S. trade unions gives him a reason to prefer domestic production as an alternative to imported fossil fuels.
But even in his Pennsylvania speeches, Biden has emphasized a 2050 “net zero” target for the whole economy. He may not welcome a sudden oil and gas shortage, but he intends to encourage a transition, and as noted, an administration may consider multiple pathways to that end short of a de jure “ban.”
It should come as no surprise that America has become the world’s dominant energy producer under the Trump administration. While we used to depend on hostile, unstable nations for our energy, President Trump set our nation on a path toward national security and energy independence.
We need to support energy infrastructure: pipelines, refineries, and storage and export facilities. Trump’s National Environmental Policy Act modernization rule is a good move in this direction, and more can be done to clear the way for growing our domestic energy production.
We must not allow special interest groups with anti-fossil-fuel agendas to block this development based on a fictitious, issue-driven agenda. We should continue rolling back costly and burdensome regulations, allowing American businesses more flexibility to grow, innovate and harvest the oil and natural gas needed to power our economy.
Apart from their uses in transportation, heating and power generation, hydrocarbons are feedstock or a necessary aspect of many fertilizers and plastics. And an abundant U.S. supply of affordable natural gas and natural gas liquids has prompted companies to invest billions in petrochemical facilities, which create the building blocks used in mobile phones, toys, food containers, plastic gloves and much more. Nevertheless, some activists insist the right thing to do with petroleum is to “keep it in the ground.” Do you think (Biden/Trump) accepts that premise? What policies do you think his administration might adopt regarding America’s petrochemical and manufacturing industries?
We distinguish between campaigning and governing when we talk with clients. For Biden to win, he must energize the progressive Democrats who support keep-it-in-the-ground policies. If he wins, however, he will be trying to revive a COVID-crushed U.S. economy–all sectors of the economy.
The Obama administration saw energy production as a means of fueling a manufacturing renaissance. As the former six-term senator from the headquarters state of a major chemical company, Biden appears to think about oil and gas–and the petrochemical feedstocks the sector produces–the same way.
To that end, Biden’s economic proposals include tax credits for industries that “reshore” back to America, although doing so will require congressional support. The “advanced” manufacturing he would hope to stimulate by doing so will need NGLs, too, as will upsizing the national strategic stockpile.
It surprises many people to learn that oil and natural gas are key ingredients in so many of the everyday items in their lives, from smartphones to personal protective equipment to plastics and the fertilizers that help our food grow. More than 80% of the products we use are made from fossil fuels, and the rest are manufactured and shipped using fossil energy; no one eats, wears or uses anything that was not made possible by oil or natural gas.
We have yet to find substitutes for the vast majority of these products that are as affordable and reliable in the long term. Because of this, we cannot allow the anti-American “keep it in the ground” contingency to thwart efforts to explore and produce critical reserves.
The most effective weapon these organizations have found to use against this industry is the apocalyptic climate change narrative–a propaganda campaign that predicts without evidence a global catastrophe unless we eliminate all greenhouse emissions, and justifies any means of doing so, regardless of the cost. We cannot allow this pro-China, anti-American mindset to prevail, or we will sabotage ourselves and our environment.
President Trump will continue rolling back and fighting new regulations to allow the petrochemical and manufacturing industries to thrive, keeping product prices low and the American economy thriving.
Regulations designed to protect the environment and public health often have side effects of increasing the cost of developing the energy that powers everything from life-saving medical equipment and essential factories to cell phones and household appliances. How might a (Biden/Trump) administration balance preserving the environment with ensuring Americans have access to energy?
To be blunt, U.S. politicians who talk about “energy access” usually mean affordable energy, because energy security for Americans is mostly about the money, not the molecules. In fact, our politicians mostly mean cheap gasoline, which typically makes up 60%-70% of household energy spending.
Consider this: Democrat Biden is challenging incumbent Republican Trump when U.S. gasoline spending as a share of per capita disposable personal income is roughly half what it was when Republican Mitt Romney challenged incumbent Democrat Barack Obama in 2012. As everyone in the oil and gas industry knows, U.S. production is a big reason why this is true. But that economic reality makes it politically easier for Biden to put environmental and public health considerations ahead of conventional, production-focused notions of energy security.
America is a world leader in environmental quality. We are the only large developed nation to meet the World Health Organization’s stringent standards for safe air, and we are number one in the world for access to clean drinking water. Despite the prevailing doomsday narrative perpetuated by the media, our environment is getting better, not worse, all thanks to America’s leadership.
During the Trump administration, concentrations of air pollutants fell to record lows, dropping by 7% in the last four years alone.
We need to pursue regulatory reform to support continued environmental progress using smart regulations that stand up to rigorous cost/benefit analysis. No regulatory remedy should be signed into law that does not have a proven and measurable environmental benefit, and any proposed laws or rules need to be further measured against the social and economic impact that they will have on the American people and society. If they cause more harm than good, as is the case with many environmental regulations, they should not be enacted.
Looking specifically at climate, International Energy Agency Executive Director Fatih Birol told the U.S. Senate Committee on Energy and Natural Resources earlier this year that the oil and gas industry had “to be part of the solution rather than being the problem,” and called carbon capture and storage the “most critical technology for reducing emissions.” To what extent do you think (Biden/Trump) sees carbon capture, utilization and storage as a worthwhile part of climate policy? What do you believe (Biden/Trump) thinks is the best way to respond to climate change, and what actions might he recommend, particularly related to U.S. production and consumption of crude oil and natural gas?
Words can change perceptions in Washington. During the Obama years, “carbon pollution” replaced “greenhouse gas emissions” and “climate crisis” replaced “global warming.” We elect politicians to stop pollution and solve crises, and the tone of debate shifted from academic to activist.
Biden has taken to describing methane as a “super-pollutant.” That term of art used to refer to fluorinated gases with global warming potentials (GWPs) many thousands of times greater than that of carbon dioxide. To Clearview Energy Partners, Biden’s GWP “grade inflation” is a pretty strong tell that he would prioritize upstream methane regulation. Fuel economy standards and incentives for an EV transition also look like priorities.
That said, we also think Biden would support CCS, and the good news for industry is that majorities of both parties on Capitol Hill appear to support it, too.
But let us offer a caution about the coming climate debate. Industry folks tend to look at climate change like the engineers and economists they are: Set a CO2 concentration target and look for ways to hit it. Their solution set includes CCS and direct air capture, and maybe a carbon tax.
On the other side, climate activists are pushing for prescriptive standards and phase-outs. Their solution set is to energize society with green electrons instead of fossil molecules, and some of them want to create new jobs with new resources instead of saving old jobs through backward compatibility. If Biden wins, he is going to be in the middle of a tug-of-war from both sides.
Before any more resources are committed to reducing CO2 emissions, the scientific community needs to revisit the Environmental Protection Agency’s endangerment finding, which nonsensically allows the federal government to regulate this harmless gas in the same manner as true pollutants that are known to cause human harm.
The best climate science points strongly to the fact that the predictions of future catastrophe resulting from CO2 emissions have been grossly exaggerated and are based on flawed interpretations of subjective data models.
As average temperatures have increased slightly over the past centuries, resilience to the climate has increased in America and globally, and the devastating weather events predicted by green activists have not come to pass (despite the mainstream media’s attempt to spin each and every natural disaster into a sign of the apocalypse to come).
Slight warming is not likely to cause significant harm in the future. Even so, the United States is a world leader in reducing both harmful emissions and CO2 emissions. This is thanks to American entrepreneurs and inventors creating new solutions powered by the affordable, reliable energy that makes experimentation and innovation possible.
President Trump will not support a pro-China carbon pricing scheme that yields no meaningful environmental benefit and would succeed only at exporting American jobs, increasing Americans’ cost of living, and giving the upper hand to other nations that don’t have the American people’s best interests at heart.
Regulation of energy production is evolving constantly. During the past decade we have seen attempts to first tighten and then loosen many federal regulatory requirements. How do you view (Biden’s/Trump’s) stance on the state of federal regulations regarding hydraulic fracturing, methane emissions, produced water management and U.S. waters subject to Clean Water Act permitting? Which of these, if any, do you think (Biden/Trump) believes are better regulated by the states than the federal government? How do you think (Biden/Trump) views the concept of “cooperative federalism” as it pertains to regulating oil and gas operations?
If Biden wins, look for the rules to change again. For the most part, we think a Biden administration would assert strong federal primacy over the authorities of cooperating states, but there are a couple of exceptions. Biden probably would try to restore states’ control over vehicle choices and restrictions over infrastructure permits, especially Clean Water Act Section 401. He would have many tools to attempt these changes.
In cases where legal defenses of Trump-era rollbacks are ongoing, a Biden administration could abandon legal defenses by petitioning the courts to remand the cases back to the agencies that issued the rules. In cases of finished rules, Biden agencies could begin the process of rewriting them.
Also, a Biden win seems likely to bring a Democrat-led House and Senate. That means Congress could roll back some final rules with the Congressional Review Act. Trump showed the line on this putt: Republicans did it 16 times in 2017.
Going further in that scenario, if Democrats eliminate the Senate filibuster, some previously untouchable environmental laws themselves could change. That could be powerful, even if Congress could not pass a sweeping climate bill because of resistance by producer-state Democrats.
Trump stocked the federal courts with judges who read laws narrowly. The same judges who are inclined to reject agency rules that take broad reinterpretations of old statutes may also greenlight substantial changes to the underlying statutes themselves.
Where federal regulatory authority and regulations exist, the states working in conjunction with the federal government (cooperative federalism) always has been more effective, as envisioned by our Founding Fathers. All the statutes and regulations referenced by the statement above have been modified, based on real-world effects to improve health, and environmental and economic outcomes.
Hydraulic fracturing has been practiced for more than 50 years to produce energy more efficiently and to drive prices down for American consumers. A multitude of studies prove the technique is safe for the environment and for public health.
Similarly, the industry has constantly sought better ways to reuse and recycle produced water, the disposal of which has represented a major portion of production costs. Methane has never been proven to be a pollutant under the Clean Air Act, and U.S. methane emissions have declined steadily since 1990 without any federal regulation.
Over the past many years, the states–and private individuals rolling up their sleeves to try new solutions–have proven to be much more effective at regulating this industry.
Two key federal laws when it comes to natural resource development are the Endangered Species Act and the National Environmental Policy Act. Although few would argue about the underlying intent of either law, many believe both have been turned into unnecessarily complicated barriers to needed energy infrastructure. How do you think (Biden/Trump) views current enforcement of both ESA and NEPA? Do you think (Biden/Trump) supports reforms to either law, and if so, what would you suggest, particularly as it pertains to energy infrastructure?
Legislative reforms of the ESA and NEPA still could be very difficult, even in a post-filibuster Senate. We think Biden might try to push reform through Congress in parallel with rewriting the rules at the agency level.
Enforcing existing rules is another underappreciated tool: Biden could turn up the dial within existing powers conferred by a range of environmental statutes, especially ESA and NEPA, aided by more-limiting environmental impact statements, unfavorable biological opinions and wider definitions of endangered species’ critical habitat.
We also would anticipate an early Biden executive order directing the Council on Environmental Quality to pull back and rewrite Trump’s NEPA guidance to permitting agencies. In its place, we would expect a restoration of requirements for agencies to consider the upstream and downstream climate impacts of energy infrastructure in their permitting decisions. We also could see new environmental justice guidelines, including longer consultation periods for a broadly defined group of at-risk communities.
The Texas Public Policy Foundation believes both ESA and NEPA were passed with good intentions, and had that intent been preserved, they still would be very effective. However, these laws do not place enough limits on federal authority, enabling unelected bureaucrats to impose far too many unjustified limits and costs on American business owners, workers and landowners. The ESA in particular grants the federal government nearly unlimited authority to restrict property rights in the name of protecting an arbitrary list of species.
As a result, these laws have become weaponized–exploited to obstruct the construction of infrastructure the American people desperately need, especially roads, and oil and gas infrastructure.
The Trump administration’s improvements to these rules provide proper limits and guidelines for each of these statutes without sacrificing the integrity of either. President Trump will work with Congress to make these reforms permanent by revising the statutes.
Energy infrastructure such as power lines and pipelines frequently traverses multiple states to connect consumers with energy supplies. This can create conflicts between state and federal authorities such as a state denying a necessary permit to a project certificated by the Federal Energy Regulatory Commission. How do you see (Biden’s/Trump’s) views on the proper interaction between state and federal agencies when it comes to permitting energy infrastructure? Do you think (Biden/Trump) believes one state should be allowed to block a project intended to transport energy supplies to consumers in another state?
We think that question could prove to be a vexing one for a Biden administration. Because different agencies make different decisions under different statutes, we would not necessarily expect a uniform doctrine. Biden probably would push for assertive federal primacy when it comes to greening the grid while enhancing states’ authorities to say no to fossil energy transportation across their interiors and from the coasts.
The contradictions imply thorny questions of law, but we would not discount the power of the presidency, especially one heightened by COVID-19 emergency authorities.
Think of it this way: Biden may have a centrist history, but he also would want his party to stay in power. Breaking down the U.S. population by generational cohorts, Democrats have two options: lean leftward to energize a rising generation of young progressives; or reach to the center to fall back on a base of moderate, but aging, Boomers.
On Capitol Hill, would-be Senate Majority Leader Chuck Schumer, D-N.Y., and House Speaker Nancy Pelosi, D-Ca., repeatedly have signaled their support for “plan A” over the past two years.
While the U.S. Constitution rightly envisions most authority lying with the states rather than the federal government, conflicting state regulations can cause regulatory confusion and uncertainty in national projects. For example, the state of Washington’s block on coal export terminals prevents Wyoming and Montana coal producers from exporting their products around the world, stifling their economic opportunity and incentivizing foreign energy imports.
Similarly, New York’s ban on pipelines means that state imports a significant amount of natural gas from Russia instead of purchasing it from nearby Pennsylvania, which would be both cheaper and have far less environmental impact.
In cases where interstate infrastructure is involved, the federal government should be the arbiter and states generally should not be allowed to block construction. Interstate commerce laws would have to be changed to mitigate this matter, and President Trump is eager to work with Congress to ensure a level playing field and predictable regulations for the power lines and pipelines our economy depends on.
The federal tax code often is used to spur development of favored technologies. As a matter of government philosophy, how do you gauge (Biden’s/Trump’s) opinion of using tax incentives to direct market behavior? As it applies to energy, what specific tax incentives do you think he would support or oppose?
Biden’s plans include muscular tax reform to effect policy changes. The reforms could come in multiple waves. The first wave seems likely to be part of a recovery-focused, post-election stimulus package that includes a suite of green energy and transition technology incentives. The green and clean provisions in HR 2, the Moving Forward Act, which was passed by the House on July 1, may offer a starting point.
That bill would:
- Extend wind production tax credits (PTC) and solar investment tax credits (ITC) for five years, adding energy storage to the ITC;
- Extend carbon-oxide sequestration credits (Section 45Q) by two years;
- Allow credit recipients to claim 85% of the value of ITC, PTC and Section 45Q credits as cash;
- Extend and phase down biodiesel blender tax credits, and credits for mixtures and alternative fuels over five years;
- Modify the EV tax credit phase-down trigger to begin at 600,000 vehicles (rather than 200,000) and expand it to apply to used EVs;
- Create new credits for heavy-duty zero-emission vehicles; and
- Reinstate the Section 48C advanced manufacturing credit created by the 2009 American Recovery and Reinvestment Act.
Taxpayer-funded subsidies should never be used to direct market behavior. Tax incentives usually have proven a costly and ineffective experiment, particularly when it comes to energy. Federal energy subsidies have cost American taxpayers more than $100 billion in the past 10 years without meaningfully changing the makeup of our energy resources.
The presumption of federal energy policy since at least the 1970s that our energy markets are not producing the “correct” mix of energy resources and are not creating enough innovation is not supported by the facts. The substantial subsidies directed toward renewable energy in recent years were intended to kickstart new technologies to make renewables more affordable and reliable. However, both wind and solar power remain prohibitively expensive and intermittent for large-scale use.
Instead, subsidies are keeping unprofitable and often foreign companies afloat at the expense of the American public while straining our electric grid and inflating energy prices.
Specifically related to crude oil and natural gas production and consumption, do you think (Biden/Trump) would favor or oppose a carbon tax? The Section 45Q credit for capturing and storing carbon dioxide? And of particular importance to independent oil and gas producers, percentage depletion and the federal income tax deduction for intangible drilling costs?
Biden has campaigned on reversing the 2017 Tax Cuts and Jobs Act (TCJA) rate reductions. He also has expressed support for rescinding existing tax treatment for oil and gas exploration and production activities.
Although Biden has said tax hikes and rescissions would be a “day one” priority, we think he may delay them if the economy is weak. Several of his economic advisers have said as much, but Biden’s effort to win over progressive Democrats leaves him less room to do the same.
In any case, Senate Finance Committee Ranking Member Ron Wyden, D-Or., who could become the upper-chamber arbiter of tax policy in our Biden scenario, proposed the Clean Energy for America Act, which targets several oil and gas tax provisions.
Building from that bill as a model, we think Biden could take aim at intangible drilling cost expensing, percentage depletion, deducting tertiary injectant expenditures, two-year geological and geophysical amortization, master limited partner status for upstream activities, refiners’ last-in/first-out inventory accounting, and net operating loss carry-forward provisions created by the TCJA.
Resistance from fossil-state Senate Democrats could make rescission a heavy lift, although history suggests efforts that apply only to multinational operators may have a slightly better chance of success.
Biden has offered his support for a price on carbon, but in addition to, rather than in place of, green incentives and regulatory mandates. We do not see sufficient congressional support for a carbon tax at present, but that could change if the European Union proceeds with its plan to put a carbon border adjustment mechanism in place in 2023. In that context, lawmakers might be willing to put a price on carbon so that U.S. exporters of manufactured goods could compete in major overseas markets–in other words, not primarily for climate reasons, but for commercial reasons.
The purpose of a carbon tax is to raise the cost of fossil fuels in an attempt to “keep it in the ground.” But without affordable, reliable substitutes for these energy resources–substitutes that do not exist and will not exist for generations at least–the tax will not change the behavior of consumers or reduce greenhouse gas emissions.
Many multinational energy organizations ostensibly support such an anti-American tax purely for positive public relations and a sense of moral superiority, precisely because it would have to be extreme (and extremely harmful for American energy consumers) in order to produce real changes.
Placing a cost on carbon emissions, especially the Environmental Protection Agency’s social cost of carbon, is fraught with scientific uncertainty and subject to such manipulation that a few minor tweaks to the formula can change the estimated social cost from thousands of dollars per ton to zero.
Several scientific studies show that slight increases in CO2 emissions actually benefit society by contributing to global greening, making agricultural crops more productive and our natural environment lusher and more vibrant. Furthermore, oil, natural gas and coal are among the only energy options that can be counted on consistently to keep the lights on.
The federal income tax deduction for intangible drilling costs is simply the ability to deduct noncapitalized expenses when constructing an oil well, which is the same as the deductions for noncapitalized expenses incurred when building a wind mill, a solar panel, a dam, a nuclear plant or any manufacturing facility. While federal agencies historically have defined IDCs as a tax subsidy, we disagree with that definition.
The U.S. Department of Interior’s Office of Natural Resources Revenue disbursed $11.69 billion in FY 2019 from energy production on federal and Indian-owned lands. In general, what priorities would guide (Biden’s/Trump’s) decisions on multiple-use federal lands? What changes, if any, would (Biden/Trump) make to the Bureau of Land Management’s oil and gas leasing program?
Biden has campaigned on shutting down federal oil and gas leasing. The Mineral Leasing Act requires quarterly lease sales for “eligible” mineral-bearing lands, but Biden still would have vast power to suspend or materially diminish onshore leasing activities.
Another law, the Federal Lands Policy and Management Act, includes several ways to suspend leasing, although FLMPA authorities have acreage and time limitations, and they are subject to congressional override.
Even so, Biden could invoke them as his administration rewrites federal land management plans to limit eligibility for oil and gas leasing, and a Democrat-led, filibuster-free Senate would seem likely to quash Republican-initiated resolutions of disapproval.
There is a phrase that originated in the Reagan administration: “personnel is policy,” because political appointees’ idiosyncratic perspectives can impact policy outcomes. Much could depend on who Biden picked as his secretary of interior. A New Mexican might be somewhat protective of production, given that more than half of the oil production in that state is on federal land.
Of course, one name circulating in Washington is retiring Senator Tom Udall, D-N.M., and he has well-established green leanings. A pick such as Democratic Governor Jared Polis of Colorado, by contrast, might signal an even tougher stance.
The federal oil and gas leasing program should be allowed to continue under the current law as long as the market allows. Federal agencies should not prohibit energy production on federal land that otherwise would be allowed on private land by the relevant environmental laws and regulations.
Turning to the offshore, the 2017-22 OCS Oil and Gas Leasing Program largely focused on biannual, areawide lease sales in the Central and Western Gulf of Mexico. Do you think a (Biden/Trump) administration would propose any changes to that in the next five-year program? How do you think (Biden/Trump) feels about opening the Eastern Gulf of Mexico, Atlantic, Pacific or Arctic oceans to oil and gas development?
We would expect Biden to follow through on his promise to ban offshore oil and gas leasing, and he could do so through several mechanisms that follow different timelines. The Outer Continental Shelf Lands Act allows presidents to cancel planned sales before they happen (Obama did so on several occasions). The OCSLA also allows presidents to withdraw acreage from the planning process temporarily, and maybe even permanently (judicial review of a Trump administration attempt to roll back Obama-era withdrawals is pending).
We think Biden might initiate a minimalist five-year plan that preserves some sales in the Central and Western Gulf of Mexico planning areas (doing so would meet statutory leasing obligations). But the plan could back-load those sales toward the end of his term, and then he could cancel them before they happen. Again, Washington has vast powers over federal lands.
We have an abundance of oil and gas production in the United States, and we should unleash the free market to pursue exploration and production in the least environmentally sensitive and most economical areas. The federal government should not impose blanket bans on drilling in certain areas.
If energy can be produced in an area while meeting environmental standards, then American energy producers should be allowed to do so. Not allowing that production likely will mean that the energy is produced in a less responsible way in a foreign nation that doesn’t share our commitment to protecting our natural environment.
What for decades seemed to be an impossible dream of American energy independence over the past several years has turned into American energy dominance as crude oil and liquefied natural gas exports have provided U.S. allies with alternatives to Middle East oil and Russian natural gas. Despite these geopolitical and economic benefits, some once again advocate banning U.S. oil and gas exports. How do you see (Biden’s/Trump’s) opinion on the efficacy of U.S. energy exports? How do you think (Biden/Trump) might propose to expand or restrict U.S. crude oil and LNG exports?
There are several mechanisms by which a Biden administration might restrict oil, natural gas and product flows into and out of the United States, but we regard export bans as “possible, but unlikely.” For example, the 2015 law that ended the crude oil export ban included emergency powers to impose a licensing requirement on exports, but we do not believe Biden is likely to invoke it.
Biden also has campaigned on a plan to establish a “climate test” for hydrocarbon exports–a judgment as to whether U.S. energy exports reduce or increase global GHG emissions on a net basis. But, in some cases, that test may validate the status quo and future exports. In any case, our understanding is that the climate test is likely to apply to new infrastructure, not to existing projects (or the molecules that flow through them).
Biden does seem likely to tighten some LNG export policies. We would expect a Biden administration to reverse the to-be-finalized Department of Energy proposal to categorically exclude LNG import and export licensing from NEPA reviews. We also think he might revoke the policy statement underpinning export license authorizations through 2050, although doing so for projects that already have been extended could require a formal rulemaking process. And new approvals may take a little longer to get through the queue at DOE and a Democrat-led FERC.
American energy dominance isn’t good only for America, it also benefits our allies and freedom-loving nations around the world.
During the Obama-Biden administration, no more than two LNG export terminals were approved; during the Trump-Pence administration, 14 LNG export terminals have been approved. These multibillion-dollar commitments will lead us into recovery from the harms inflicted by the China virus.
We should continue President Trump’s legacy of exporting oil and LNG to our trading partners wherever it is economically feasible. Energy is a critical asset to U.S. national security and to maintaining a strong upper hand in global negotiations as long as we remain self-sufficient.
We do not need to again place ourselves at the whim of totalitarian foreign governments for this very vital resource. Americans should be proud that our energy workers are transporting clean, abundant LNG to countries that do not have access to this treasured resource, and are thereby exporting America’s freedom, prosperity and clean air to all the world.
As director of research, KEVIN BOOK heads the research team at ClearView Energy Partners LLC, an independent research firm headquartered in Washington. Book’s analytical coverage includes policy, economic and geopolitical trends impacting fossil fuels and technologies. He appears frequently within print and broadcast media, contributes to policy forums convened by government and private organizations, and meets with top Washington decision-makers. Book also has testified before several House and Senate committees. He is a member of the Council on Foreign Relations and the National Petroleum Council. He is a nonresident senior associate with the Energy Security and Climate Change Program at the Center for Strategic and International Studies. Prior to co-founding ClearView, Book worked as a senior energy analyst for a national investment bank. He holds an M.A. in law and diplomacy from the Fletcher School of Law and Diplomacy, and a B.A. in economics from Tufts University.
JASON ISAAC is director of Life: Powered, a national initiative of the Texas Public Policy Foundation to raise America’s energy IQ. Prior to joining the foundation, Isaac, a fourth-generation Texan, was elected four times as the state representative for Hays and Blanco counties in the Texas Hill Country. During his eight years in the legislature, he successfully passed legislation to reduce taxes, strengthen election integrity, improve public education, preserve Second Amendment rights, protect local groundwater, and protect private property rights. Isaac has appeared on national news shows, and his commentaries have been published in The Hill, The Washington Examiner, the Daily Caller, and other publications. Isaac is a graduate of Stephen F. Austin State University, a board member for the Digital Education and Work Initiative of Texas, and a high school lacrosse coach.