Obama Administration Energy Policy Threatens U.S. Economy

Johnathan Sargent Federal Affairs Associate, Americans for Tax Reform

If continued the Obama administration’s current energy policy will deal a devastating blow to the nation’s energy production. In a recent study, the U.S. Chamber of Commerce looked at what would happen if the current policies of the Obama administration and the “Keep it in the Ground” activists were enacted. Not surprisingly, the result is a sharp decline in the current production of energy, the loss of hundreds of thousands of jobs, and a devastating economic impact on several states.

The use of federal lands for energy production has been a hotly debated issue in recent years. Heavily influenced by the “Keep It In the Ground” mindset, several prominent Democrats, including Senator Bernie Sanders (I-Vt.) and the Democrat nominee for president Hillary Clinton, have become ardent supporters of limiting or banning the use of federal lands for energy production. Of course, this ban would only apply to certain methods of energy production that they have deemed “bad” for the environment.

These restrictive and harmful energy policies are the center of the U.S. Chamber of Commerce’s “What if Energy Production Was Banned on Federal Lands and Waters?” The study shows what the impact of these policies would be if they were continued or enacted fully.

The United States would lose nearly a quarter of the nation’s current production of coal, oil and natural gas. Of the 2.27 billion acres of land in this country, the United States government owns 28 percent of it, which the government has leased out for the use of energy production.

In 2006, federal lands accounted for 35 percent of total U.S. fossil fuel production, but in 2015 it only accounted for 24 percent of the total production. This decline has come at a time when the United States has benefited greatly from an increase in domestic energy production. Instead of attempting to fix this problem, the Obama administration has deemed it necessary to further restrict the use of federal land. These actions will greatly compromise U.S. energy production and destroy thousands of jobs.

A total of 380,000 jobs could be lost if energy production is banned on federal lands. Of these 380,000 jobs, over 100,000 jobs are directly related to oil and gas extraction and coal mining. An additional 75,000 workers are employed indirectly by suppliers to these industries, and over 200,000 induced jobs are also supported. These are good jobs that pay wages higher than the national average, and if lost numerous families will be devastated by the loss of income. Yet, the current administration continues to put these jobs at risk.

These policies will deal a devastating economic blow to states. The royalties generated from federal lands represent a significant source of income for several states. In most cases, this income goes to educational programs and local governments. Also, let’s not forget the decrease in GDP overall in states dependent upon the energy sector. The hardest hit states would be:

  • Colorado: has the highest number of oil and gas employees working on federal lands, which amounts to 50,000 jobs when including indirect and induced jobs. This sector alone contributes nearly $8.3 billion to the GDP of Colorado.
  • New Mexico: receives a startling $496 million in state royalties from energy production on federal lands. Outside of sales and income tax this is the highest source of revenue for the state. Energy production also accounts for $4 billion of the state’s GDP.
  • Wyoming: would be hardest hit. It receives nearly $1 billion in royalties from the leasing of federal lands. Additionally, oil, gas, and coal development activities account for nearly 20 percent of the state’s GDP.

Hundreds of thousands of American jobs lost, a severe economic blow to the states, and a sharp economic decline are the result if the “Keep it In the Ground” mindset prevails. The Obama administration has already taken the first step by issuing a moratorium on the leasing of federal land for coal production. If this continues, all of the economic gains that the United States has made since the Great Recession will be put at risk. Hopefully it is not too late.