Study: Toll Of Clinton’s Fracking Ban Would Be ‘Severe’

As Hillary Clinton fought to contain rivals in the Democratic presidential primary, she took increasingly strident stands against energy production on federal lands and waters.

The 2016 Democratic Party Platform continued the same push, saying it will “phase down extraction of fossil fuels from our public lands.”

In February, Clinton told 350 Action, the political arm of an environmental group, that she would “impose a moratorium” on coal, oil and gas leases on federal lands. Asked about extraction on public lands, Clinton said it was a “done deal.”

She added: “That’s where the president is moving: no future extraction. I agree with that.”

A report by the U.S. Chamber of Commerce Institute for 21st Century Energy paints a bleak picture of how the U.S. economy would suffer in such a scenario.

A ban on future leasing of federal lands and a halt on current production would be “immediate and severe to the U.S. economy.” Energy prices would increase, hundreds of thousands of high-paying jobs would be lost and the federal government and primarily Western states would lose billions of dollars in potential royalties, the report said.

The chamber’s analysis paints a bleak aftermath in the event all leasing and operations on federal lands is halted.

Repercussions could affect:

• Production: Nearly a quarter of the nation’s current coal, oil and natural gas supply would be lost;
• Revenue: State and federal governments stand to lose $11.3 billion per year in royalties and rental fees;
• U.S. GDP: More than $70 billion threatened; and
• Jobs: 100,000 direct jobs associated with energy development on federal lands and another 280,000 indirect and induced jobs would be impacted.

“American voters deserve to understand the real-world impacts of the proposals that candidates and their allies make,” said Karen Harbert, president and CEO of the chamber’s Institute for 21st Century Energy. “In an effort to appeal to the ‘keep it in the ground’ movement, a number of prominent politicians have proposed ending energy production on federal lands, onshore and off. Their proposals will have a direct, harmful effect on the American economy and in particular decimate several states that rely heavily on revenues from federal land production. Given the implications, these policy proposals should not be taken lightly.”

The federal government has already been taken to task by the industry and in congressional hearings for its inability to manage oil and gas lease sales. On Aug. 11, the Western Energy Alliance sued the U.S. Bureau of Land Management (BLM) for failing to hold oil and gas lease sales as required by law.

Related: BLM’s Oil And Gas Lease Sales Draw Ire, Lawsuit

The BLM said it takes an average of 220 days to approve an Application for Permit to Drill (APD), despite the Energy Policy Act of 2005 that directs the bureau to take action on submitted APDs within 30 days. About half of that time is spent by operators filling out forms. BLM then takes an average 104 days to complete the permitting process.

“In comparison, approval of submitted applications by state regulators overseeing development on state and private lands averages 30 days, but at times approval can be granted in as little as 10 days,” the chamber’s report said.

Overall, fossil fuel production has declined on federal lands since 2006, which is about the same time the shale boom began to take off.

The U.S. has increased oil production by 88% since 2006 and natural gas production by 51%, the chamber’s report said. “Much of the growth in this production has occurred in states with relatively little federally-administered acreage, such as Texas, North Dakota, and Pennsylvania,” the report noted.

The federal government administers about 28% of the nation’s total onshore and submerged acreage along the Outer Continental Shelf. In 2015, 24% of the nation’s coal, oil and natural gas was mined or extracted from federal lands.

Immediately ceasing production on those lands would have cost $7.2 billion in 2015. From 2011 to 2015, the federal government collected $46.5 billion, enough to fund the budget of either the U.S. Environmental Protection Agency (EPA) or the U.S. Army Corps of Engineers over that time.

Even a ban on further leasing—leaving existing production intact—would be significant. Royalties from federal land production would decrease by more than 75%, or $6 billion, during the next 15 years, the report said.

Clinton has shifted her position on fracking over the past several years. As secretary of state, Clinton pushed fracking as a way to move Europe away from Russian influence.

More recently, Clinton drew climate groups’ scorn by naming Ken Salazar, former secretary of the interior and a proponent of fracking, to her presidential transition team.

The chamber’s report notes that the temptation to dismiss statements made by candidates as a way to “appeal to their base” is cynical and needs to change.

Clinton, the report said, should be taken at her word.

Darren Barbee can be reached at dbarbee@hartenergy.com.