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Authored By: Taylor Sims
Member, American Journal of Trial Advocacy
Steadily increasing gas prices, looming heating costs—all amidst United States inflation at a 31-year high appear may pose the most ominous winter storm of all this year.[1] This month, OPEC and its oil-producing allies responded to President Biden’s call for greater energy production on the global front.[2] Specifically, OPEC retorted that “if the United States believes the world’s economy needs more energy, then it has the capability to increase production itself.”[3] Now, President Biden finds himself pulled by opposing forces: the necessity for the United States to produce a sufficient oil supply and environmental promises to limit U.S. production of hydrocarbons.[4]
In January, President Biden released a federal moratorium on future oil and gas drilling permits, to fulfill his campaign promise to end drilling on federal lands and the continental shelf.[5] By way of background, “[a]lmost a quarter of US oil production and 12 percent of natural gas production takes place on federal land and water.”[6] The Interior Department Office of Natural Resource Revenue estimates the federal drilling programs generate $11.7 billion in tax revenue.[7] If the moratorium applies to all of the active leases on federal land, then this revenue disappears.[8] While the ban may have negligible impacts in the short term, it will nevertheless deliver a “massive blow” to the U.S. hydrocarbon industry.[9]
Prior to this administration, the United States’ domestic oil production, fueled by hydraulic fracturing, led the country towards “net exporter status and energy independence.”[10] For example, the U.S. decreased its OPEC imports from over six million barrels per day to under seven-hundred thousand.[11] “Increased economic independence from foreign powers, particularly from democracy-averse [OPEC] members, is unquestionably a foreign policy win for the United States.”[12] This independence carries with it the ability to promote democratic values and implement environmental standards—all while boosting our economy and creating jobs for American workers.[13] Accordingly, it should have been clear to the current administration that now is not the time to outright abandon natural gas and make an “overly ambitious green transition.”[14] Yet, we are already witnessing the consequences of policies that inhibit domestic production and feeling those impacts on American pocketbooks.[15]
One area directly impacted by the mortarium on future oil and gas drilling permits is domestic pipelines. To illustrate, the moratorium on drilling permit issuances on federal lands and waters “effectively killed the KEYSTONE XL pipeline from Canada to the U.S. in the name of environmental and Native American tribal concerns.”[16] On his first day in office, President Biden issued an executive order revoking the critical presidential permit for Keystone XL.[17] The revocation stated, “[l]eaving the Keystone XL pipeline permit in place would not be consistent with my Administration’s economic and climate imperatives.”[18] In doing so, President Biden forfeited an estimated 42,000 American jobs, $3.4 billion of annual income to the U.S., and a production of 800,000 oil barrels per day.[19] The pipeline is one of the most studied infrastructure projects in American history, construction had already commenced, and it cleared countless legal and environmental hurdles.[20] In spite of these factors, President Biden abandoned the project and its potential economic advancements under the guise of “climate imperatives.”
The Keystone pipeline has turned into a prototype—the administration has been “reportedly studying the consequences of shutting down Line 5,” an oil and natural gas pipeline that carries heating and transportation fuels from Wisconsin through Michigan to Ontario.[21] Such a shutdown would be a “replay of the Keystone XL cancellation,” except even more destructive, as this pipeline is already in operation, with thousands dependent upon its materials.[22] While reports earlier this month indicated that the administration was in fact investigating a shutdown of the pipeline, more recently, the administration backtracked and denied such a move.[23] The government “must [have] realize[d] that further price hikes, along with self-imposed energy shortages, will occur if a shutdown moves ahead.”[24] If the administration “circles back” and ultimately shuts down yet another northern pipeline, the families of Michigan would bear the brunt of the decision, as Michigan uses more residential propane than any other state.[25]
Opponents of the pipeline recommend that the state access its energy through trucks instead; however, this would cause a massive increase in traffic, along with its own attending emissions.[26] Moreover, studies suggest that pipelines provide much safer transportation than trucks, as trucks spill more than twice as much as pipelines at a more frequent rate.[27] Even when solutions exist to make the pipeline environmentally compliant, at the end of the day, the issue here “isn’t about legality. It’s about litmus tests.”[28] While pipelines alone cannot account for the rising prices, President Biden should do what he can by preserving Line 5 and supporting “America’s energy workers and made-in-America oil and gas.”[29]
While President Biden’s track record on domestic pipelines exudes the aura of “strict environmentalist,” he fails to apply the same climate urgency elsewhere. For example, the President took a starkly different approach with Nord Stream 2, a pipeline to transport natural gas from Russia to Germany.[30] Namely, the Biden administration waived sanctions on the building of the Nord Stream 2 earlier this year.[31] One might ask, was this move consistent with the current administration’s “climate imperatives”?
In contrast, the previous administration publicly opposed Nord Stream 2, in fear that it would provide Russia “greater economic and political leverage over Europe.”[32] Accordingly, the Trump administration imposed sanctions on the pipeline project in December of 2019, which were followed by a series of “harsh sanctions” issued by congress.[33] While at the beginning of Biden’s presidency he appeared to share the same disapproval of the project as his predecessor, just months later he ultimately “waived the harshest sanctions and introduced some watered-down measures in their place.”[34] Biden cited two primary reasons for waiving the sanctions: he wanted to remedy the U.S.’s relationship with Europe and the pipeline was nearing completion.[35] However, many have noted that the U.S. had more control over the construction than Biden conceded—for instance, following the 2019 sanctions, construction halted for nearly a year.[36] Subsequently, the pipeline was completed in September and Russia has begun filling it with gas—in other words, their pipeline is ready to operate.[37]
In addition to President Biden’s inconsistent policies regarding pipelines abroad and at home, he has also pledged to stop public financing for most overseas oil and gas projects by next year.[38] Biden, along with about twenty other countries, made the pledge this month at the COP26 climate summit.[39] However, the pledge is limited to “unabated” oil and gas projects, meaning projects that account for the capture of carbon and feature sequestration technology will be permissible.[40] It is impossible to ignore the irony of Biden pushing clean energy, while simultaneously seeking more oil production.[41] Albeit, Biden finds himself in an impossible position, as he attempts to satisfy his party base by fighting the “war” on climate change, while also coming to terms with the reality that “the idea that we’re going to be able to move to renewable energy overnight…is just not rational.”[42]
Although difficult to pinpoint an exact cause of the rising oil and gas prices[43], it is equally difficult to ignore the path that Biden set forth as early as his first day in office, revoking the permit of a critical pipeline.[44] He has since focused much of his efforts on penalizing domestic oil and gas producers[45], while turning to foreign oil suppliers to compensate where we now lack. While it is important to be mindful of environmental factors, Biden’s policy only increases our nation’s reliance on foreign oil, whereas the former administration propelled America to energy independence.[46] Some suggest that Biden should tap into the Strategic Petroleum Reserve to “aggressively confront” inflation and go as far to say it is a “political imperative for the White House.”[47] While such a remedy would certainly send “mixed messages,” the administration has already signaled a myriad of mixed messages on its oil and gas position at the global scale.[48] The President should recognize that sometimes, “the urgent has to take precedence over the important,” and that keeping Americans warm this winter is certainly a matter of utmost urgency.
[1] Gwynn Guilford, U.S. Inflation Hit 31-Year High in October as Consumer Prices Jump 6.2%, Wall St. J., November 10, 2021, https://www.wsj.com/articles/us-inflation-consumer-price-index-october-2021-11636491959.
[2] Ariel Cohen, OPEC Says to Biden: If You Want More Oil, Pump It Yourself, Forbes, November 9, 2021, https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says-to-biden-if-you-want-more-oil-pump-it-yourself/?sh=512936fe3efd; see also Andrea Shalal & Jeff Mason, Biden pushes G20 energy producing countries to boost production, Reuters, October 30, 2021, https://www.reuters.com/business/energy/biden-push-g20-energy-producers-boost-capacity-ease-price-pressures-2021-10-30/.
[3] Id.
[4] Id.
[5] Ariel Cohen, Biden May Kill a Quarter of U.S. Oil and Gas Production, Forbes, January 27, 2021, https://www.forbes.com/sites/arielcohen/2021/01/27/biden-may-kill-a-quarter-of-us-oil-and-gas-production/?sh=354e4a5e361c.
[6] Id.
[7] Id.
[8] Id. (noting the $11.7 billion revenue will be unavailable, despite “the mushrooming 2020 federal debt of $27 trillion and budget deficit of over $3 trillion – a whopping 16 percent of the GDP”).
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id. (suggesting that job losses because of a lasting leasing moratorium could peak at 936,000 in 2022).
[14] Id.
[15] Id.
[16] Cohen, supra note 2.
[17] Jennifer Dlouhy, The Keystone XL Pipeline has Officially Been Canceled After Opposition from Biden Administration, Time, June 10, 2021, https://time.com/6072591/keystone-xl-pipeline-canceled/; Exec. Order No. 13990, 86 FR 7037 (2021).
[18] Exec. Order No. 13990, 86 FR 7037 (2021).
[19] Global Energy Institute, Background of Keystone XL, https://www.globalenergyinstitute.org/background-keystone-xl.
[20] Id.
[21] Jason Hayes, Democrats Threaten to Send Winter Shivers Through Michigan, Wall St. J., November 12, 2021, https://www.wsj.com/articles/democrats-threaten-winter-michigan-enbridge-line-5-propane-energy-prices-whitmer-biden-11636749884.
[22] Id.
[23] Id.
[24] Id.
[25] Id.
[26] Id.
[27] Id.; see also John Frittelli et al., U.S. Rail Transportation of Crude Oil: Background and Issues for Congress, Cong. Rsch. Serv., December 4, 2014, https://sgp.fas.org/crs/misc/R43390.pdf.
[28] Hayes, supra note 20.
[29] Id.; Benoit Faucon & Timothy Puko, Rising Oil Prices Put Biden in a Bind Over Climate Pledges, Wall St. J., November 10, 2021, https://www.wsj.com/articles/biden-gas-oil-prices-opec-11636541739.
[30] Dlouhy, supra note 16.
[31] Id.; see also Syszarda Formuszewicz & Agata Łoskot-Strachota, Deal between Germany and the US on Nord Stream 2, OSW: Ctr. for E. Stud., July 22, 2022, https://www.osw.waw.pl/en/publikacje/analyses/2021-07-22/deal-between-germany-and-us-nord-stream-2.
[32] Thomas Colson, Trump was slammed for cozying up to Putin but Biden handed him a greater gift by waiving sanctions on a gas pipeline that could destabilize Europe, Bus. Insider, October 20, 2021, https://www.businessinsider.com/nord-stream-2-biden-gift-to-putin-could-destabilize-europe-2021-10.
[33] Id.
[34] Id.
[35] Id.
[36] Id.
[37] Id.
[38] Zack Colman, U.S., U.K. lead pledge to end overseas oil and gas financing, but with big caveats, Politico, November 4, 2021, https://www.politico.com/news/2021/11/04/us-uk-pledge-end-overseas-oil-gas-financing-519573.
[39] Id.
[40] Id.
[41] Jim Tankersley & Lisa Friedman, Even as Biden Pushes Clean Energy, He Seeks More Oil Production, N.Y. Times, November 1, 2021, https://www.nytimes.com/2021/11/01/climate/biden-oil-gas-cop26.html.
[42] Id.
[43] See also Eric Levitz, Two Big Myths About Why Energy Prices Are Rising, N.Y. Mag., November 11, 2021, https://nymag.com/intelligencer/2021/11/why-are-energy-prices-so-high.html (noting the impact of the energy crash of 2014 on today’s oil and gas prices).
[44] Tim Murtaugh, Biden on Energy Crisis: Begging Others to Save Him From Himself, The Daily Signal, October 18, 2021, https://www.dailysignal.com/2021/10/18/biden-on-energy-crisis-begging-others-to-save-him-from-himself.
[45] Id. (providing that in continuing his assault on oil and gas, Biden suspended oil and gas leases in Alaska); see also Nichola Groom, Biden suspends Trump-era oil and gas leases in Alaska refuse, Reuters, June 1, 2021, https://www.reuters.com/business/energy/biden-administration-suspend-some-oil-gas-leases-alaska-report-2021-06-01/; Coral Davenport, Biden to Bar New Drilling Around a Major Native American Cultural Site, N.Y. Times, November 15, 2021, https://www.nytimes.com/2021/11/15/climate/biden-bans-drilling-chaco-canyon.html (noting that Biden will bar new drilling around native American burial site and citing the “disproportionate impact of climate change on tribal populations”); Timothy Puko & Katy Stech Ferek, World Leaders Vow to Cut Methane Emissions, Wall St. J., November 2, 2021, https://www.wsj.com/articles/epa-moves-to-limit-methane-emissions-from-oil-and-gas-production-11635829202?mod=article_inline (pledging to cut methane emissions, which would cost the oil and gas industry an estimated $1.5 billion upon implementation).
[46] Murtaugh, supra note 43.
[47] Eugene Robinson, Opinion: To show he cares about inflation, Biden should tap into the Strategic Petroleum Reserve, Wash. Post, November 11, 2021, https://www.washingtonpost.com/opinions/2021/11/11/show-he-cares-about-inflation-biden-should-tap-into-strategic-petroleum-reserve/.
[48] Id.
American Journal of Trial Advocacy 