On-and-off again relationships can be messy and have a lot of unintended consequences – the same holds true for a federal oil and gas leasing moratorium.
As courts go back and forth on the legality of the Department of Interior’s federal oil and gas leasing ban, Montana’s energy companies and others throughout the country have been subjected to long periods of uncertainty, hurting local economies and state revenues. Oil and gas operations on federal lands have been repeatedly stopped, and then subsequently started, and then stopped again as this issue plays out in the courts, and it remains to be seen what the final verdict will be.
The thinking behind this potential leasing ban is that the ramifications of oil and gas operations are potentially hurtful to the environment and will delay our nation’s inevitable energy transition – but that could not be further from the truth.
As the Executive Director of the Treasury State Resource Association, I have long collaborated with the oil and gas industry – in addition to labor, agriculture, and recreation groups—to work together on issues that affect land use, conservation, and resource development in Montana. Many of our members and other businesses throughout the state benefit from the money provided by oil and gas operations, particularly through investments in the communities they serve.
The oil and gas sector has provided billions in state revenue over the past years, most of which goes toward crucial capital outlays like education, healthcare, and infrastructure – and of course, preservation efforts. Without the financial contributions and royalties collected from oil and natural gas operations, Montana’s communities, environment, and very way of life would be forever changed. Energy states like ours cannot afford to have a wide-sweeping, blanket federal leasing ban put into place – the repercussions are too severe.
Firstly, with gas prices rising in Montana and the Organization of the Petroleum Exporting Countries (OPEC+) rebuffing calls from federal officials to increase production levels, there is an urgent need to preserve America’s energy independence. Protecting domestic oil and gas operations is critical to maintaining our nation’s energy reserves and ensuring that we don’t have to rely on other nations – including rivals like Russia – to satisfy our energy needs.
But a leasing ban would curtail domestic production and instead leave us at the whims of foreign counterparts. An analysis of a federal leasing halt by the American Petroleum Institute found that through 2030, the United States would spend $500 billion more on energy from foreign suppliers and oil imports from foreign sources would increase by 2 million barrels a day.
This not only hurts job creation, the economy, and our energy independence but has environmental impacts as well. Outsourcing our oil and gas needs means that countries with less stringent environmental regulations will increase production, resulting in additional air and water pollution in those countries and globally than would be if production remained here.
Additionally, putting a stop to leasing on federal lands would have devastating consequences for communities that rely on oil and natural gas revenues to support local investment and development. Revenue from oil and gas activity comprises 5.6% of Montana’s General Fund Budget, which provides funding for state and local programs such as education, conservation, healthcare, and infrastructure.
We cannot take away critical funding from communities with no solution and expect there to be no consequences, especially with the precarious financial situations many find themselves in due to the pandemic. Workers are still getting back on their feet, businesses are struggling to keep their doors open, and students are soon returning to school. Our lawmakers need to prioritize helping our communities and ensuring their recovery rather than pursuing an ill-advised leasing ban that leaves economies in jeopardy and hurts growth and development.
A federal leasing moratorium would also further exacerbate economic woes due to the jobs and economic activity lost from such an action. The oil and natural gas industry supported over 50,000 jobs –many of them offering high-paying, reliable work – and contributed more than $6.2 billion to Montana’s economy in 2019. This notable economic impact is rivaled by no other professional industry in the state – we cannot afford to have its contributions reduced.
Montana’s workers, enterprises, and communities have long had a prosperous and supportive relationship with the state’s oil and gas industry. The state revenue provided by the industry’s operations has been critical to growing our state’s economy and boosting business for some time and will continue to be in the future – but only if lawmakers come to their senses and say no to a federal leasing ban.
Peggy Trenk is Executive Director of the Treasure State Resource Association.
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