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Ending Federal Offshore Oil and Gas Lease Sales in Next Five-Year Program Would Have Little to No Impact on Gas Prices, Jobs, and Economy, According to New Analysis

By Jackson Chiappinelli, Dustin Renaud, and Kendall Dix - Earthjustice, June 29, 2022

Amid climate crisis and record gas prices, new analysis debunks oil and gas industry claims on need for new federal leasing by offering further evidence that ending new federal offshore leasing would not raise gas prices for nearly two decades, and would have virtually no net economic impact.

According to a new report out today, putting an end to new federal offshore leasing on public waters for the next five years:

  • Would result in less than a cent increase in gas prices at the pump over the next two decades
  • Would still maintain close to current levels of oil production capabilities for many years
  • Would not have the drastic impact on workers in the Gulf or the national economy that the fossil fuel industry has purported. Industry’s claims about economic impacts fail to account for the ways that energy and job markets gradually adapt and the burdensome climate costs averted from transitioning to clean energy
  • Result in between $23 billion and $365 billion dollars in climate benefits through 2040

The new report, which was supported by Earthjustice, Healthy Gulf, and Gulf Coast Center for Law & Policy (GCCLP) and published by Apogee Economics and Policy, a leader in energy production forecasts and benefit-cost assessments related to energy development, rebuts industry claims that ending leasing would significantly impact production and the economy. Instead, the report provides analysis that shows that the Biden administration can end new leases for the next five years without raising gas prices, preventing oil production, and negatively impacting jobs. The new report supports the opportunity for moving the United States away from fossil fuels and meaningfully addressing the worsening climate crisis, instead of giving into demands by the oil and gas industry to double down on decades of more carbon pollution.

For years, oil and gas development has contributed to worsening climate impacts, devastation for Gulf communities, environmental destruction, and dangerous conditions for offshore workers. Because federal offshore leasing locks in development for decades, putting an end to leasing is essential if the Biden administration is going to meet its national climate pollution and Paris Agreement targets and environmental justice commitments.

The new report comes just ahead of the release of the Interior Department’s next five-year offshore oil and gas leasing program. In the upcoming program, Interior will propose a schedule of federal offshore oil and gas lease sales for the next five years and has the option to not hold any new lease sales over that five-year period.

“President Biden promised to address the climate crisis, including by halting new offshore oil leasing. This analysis confirms that more offshore leases would have no positive economic impact, and benefit no one but the fossil fuel industry,” said Drew Caputo, vice president of litigation at Earthjustice. “The Biden administration needs to honor its climate promises by ending new offshore oil leasing in its five-year program.”

“This report confirms what we have always suspected: The oil and gas industry has been peddling falsehoods to protect their record profits,” said Cynthia Sarthou, executive director of Healthy Gulf. “Gulf communities and workers deserve better than this boom and bust extractive economy that harms and kills more workers than nearly any other industry and damages our coastal wetlands and water quality to a point of crisis. We choose now to end new leasing in the Gulf and everywhere.”

“Frontline communities must be at the center of any discussion about climate policy,” said Colette Pichon Battle, executive director of Gulf Coast Center for Law & Policy. “Too often, governments make decisions in the interest of oil and gas companies over people’s well-being. This report is clear: Saying no to oil and gas leasing in public waters and investing in justly sourced renewable energy is a win-win for the Gulf South.”

The report examines and corrects unsubstantiated claims made by Energy & Industry Advisory Partners (EIAP) in a March 2022 analysis, commissioned by the American Petroleum Institute (API) and National Ocean Industries Association, that incorrectly declared any delay of new offshore Gulf of Mexico federal leasing would “significantly impact Gulf of Mexico oil and natural gas industry activity” and could subsequently lead to reduced oil and natural gas production, industry spending, jobs, contribution to GDP, and government revenue.

According to the Apogee report, new leasing would result in only minimal net impacts on the economy. As the U.S. transitions to a clean economy, it is imperative that the government ensure a just transition for communities across the Gulf that rely on jobs and economic revenue from the oil and gas industry. Gulf communities must be part of a just transition. However, industry has repeatedly overestimated the economic impacts to the Gulf of ending new federal leasing, including in the EIAP analysis.

The new analysis shows that if the Bureau of Ocean Energy Management (BOEM) does not hold a single lease sale in the Gulf of Mexico (where 98% of federal offshore leasing occurs) over the next five years, the impact on the cost of gas would be virtually nonexistent for nearly two decades. Any price increase at the pump over the next 19 years would be less than a penny per gallon. Even if BOEM were to permanently stop issuing new federal offshore leases, the result would be only an estimated 1 to 2 cents per gallon difference in price to customers at the pump over the next 30 years. This means that scheduling no new lease sales in the upcoming five-year program will not cause any meaningful increase in gas prices now or in the foreseeable future.

The Biden administration has a unique opportunity in 2022 to determine the future of offshore leasing in federal waters for the next five years. We already know that our climate and communities cannot afford new offshore leasing. This new analysis demonstrates that no new leasing will have negligible impacts on gas prices, production, energy needs, and jobs. Gulf communities, most impacted by federal offshore leasing, are owed a just clean energy transition and a strong economic future.

Disclaimer: The views expressed here are not the official position of the IWW (or even the IWW’s EUC) and do not necessarily represent the views of anyone but the author.

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