Wyo. governor: Biden oil ban would be ‘devastating’

Source: By Heather Richards, E&E News reporter • Posted: Wednesday, December 16, 2020

President-elect Joe Biden’s plans to cut oil and gas development on public lands as part of a path to net-zero emissions by 2050 and a clean energy economy could come at a $300 billion cost to Western states, according to the governor of one of those oil-rich states.

In a study funded by the Wyoming Legislature, state officials analyzed the potential effect on energy production and state revenue if Biden ends the oil and gas program on federal lands, as he pledged to do during his campaign.

The drilling ban proposals loom over an already thrashed economy in Wyoming, where an oil, gas and coal bust could leave a $1 billion hole in the state’s coming two-year budget. Wyoming legislators have been staunchly pro-fossil fuels as they struggle to find new ways to cut state budgets drained by declining energy revenues.

Wyoming Gov. Mark Gordon (R) said during a press briefing yesterday that Biden’s plan would be “devastating” for the state and that oil was both part of Wyoming’s history and its future.

Biden has said he will end new oil and gas permitting on federal land, effectively closing the industry’s ability to drill new wells. The policy would also end new leasing, which conveys the underlying right to develop federal minerals.

The efforts to curb oil, gas and coal development are part of Biden’s broader plan to transition the United States away from fossil fuels. The Biden transition team did not respond to a request for comment.

The Wyoming study looked at seven states that would be impacted by federal leasing or permitting bans, including New Mexico and Alaska. Either policy would eliminate more than $300 billion in state-level gross domestic product (GDP) over the next two decades across those states, according to the study. In the near term, New Mexico’s and Wyoming’s GDPs would be hit hardest, with Alaska facing the brunt of that loss in the coming years.

Gordon argued that addressing carbon dioxide emissions and supporting energy development don’t have to be at loggerheads. The state relies on fossil fuel revenue for a sizable portion of its annual budget. But the state has been reluctant through multiple energy industry downturns to reform its mineral-reliant tax structure. The industries’ tax and royalty payments keep the state’s property and business taxes low. Wyoming also has no income tax.

The Cowboy State had been a persistent opponent of efforts during the Obama administration to reduce the nation’s reliance on oil and coal.

Jill Morrison, an organizer at the Powder River Basin Resource Council in northern Wyoming, said reviving an antagonistic relationship toward policy changes aimed at cutting greenhouse gas emissions would only serve to edge Wyoming out of a coming transition to cleaner fuels.

“If we are willing to play ball [with Biden’s climate goals], there will be some funding stream for Wyoming to help us transition,” she said. “But if we want to play the same old game and battle it, we are going to be losers.”

The Biden transition team did not respond to request for comment.

Mike Madden, a former Wyoming state representative, said raising sales and property taxes in Wyoming could fill much of the current funding gap. But he said that would fail to solve the larger problem of what happens to the budget if the government ends oil, gas and coal production on public land.

Biden’s proposals would be “disastrous,” said Madden, a Republican, noting a spillover effect for adjacent state, tribal or private property.

Biden has at times called for a gradual energy transition when pressed on his plans. But the impact would be a rapid downturn in the West, according to the Wyoming study. This is due to modern drilling techniques and long lateral wells, which produce tremendous amounts of hydrocarbons in the first few years of production before rapidly declining.

With no new wells to replace declining production across the West — particularly in New Mexico and Wyoming — the study projects a rapid drop-off in fossil fuel revenues across the region.

Revenue losses in Wyoming from a leasing moratorium, for example, would average $304 million a year for the next five years. That would rise to a $1.7 billion annual loss by 2036 as wells die off.

Madden said the economic situation in Wyoming could grow worse in the coming months. Lawmakers there are weighing whether to meet for the legislative session in a matter of weeks despite the risks of spreading COVID-19.

“Something has to be done real soon,” he said of the state’s reliance on fossil fuel revenues. “We are running out of time.”