Texas congressman overstates job losses tied to ban on new drilling leases

President Joe Biden made good on his promise to take action on curbing U.S. emissions when he issued an executive order halting new oil and gas leases on federal lands and water.  

The order, signed Wednesday, directs the Department of the Interior to pause issuing leases to oil and gas companies pending a review of the climate impacts of the department’s leasing and permitting practices. About 22% of U.S. oil production is reliant on federal lands and waters.  

Anticipating Biden’s move, U.S. Rep. Kevin Brady, R-Texas, expressed dismay at how a moratorium on leasing would impact jobs in Texas’ oil and gas sector.  

"Killing more Texas jobs," Brady said in a Jan. 22 tweet. "After killing #KeystoneXL pipeline, #Biden suspends new oil/gas leasing on fed lands/water. If permanent, 120,000 TX jobs lost. 120,000 MORE jobless. Pssst... aren't you supposed to CREATE jobs?" 

Biden’s move will have a disproportionate effect on states with large swaths of federal lands used for oil and gas activity. New Mexico, for instance, has 24 million acres of federal land, or about 32% of the state’s total land mass; Wyoming has 29 million federally owned acres, or about 47% of the state. 

Texas, on the other hand, has very little federally-owned land — 3 million acres, or 2% of the state. Nearly half of that is managed by the U.S. National Park Service. As of 2019, about 185,000 acres were under lease for oil and gas production in Texas. 

Although most of Texas’ oil and gas industry is based onshore, a sliver of the industry is actively drilling in federal waters in the Gulf of Mexico. As of Jan. 22, there were 16 offshore rigs in the Gulf compared with 175 on Texas land, according to the Baker Hughes rig count. (In February last year, before the coronavirus pandemic dealt major blows to the global oil industry, about 20 rigs were deployed in the Gulf compared to around 400 onshore in Texas.) 

With such a small fraction of the state’s industry likely impacted by Biden’s directive, is Brady correct when he says that 120,000 Texas jobs are at stake? 

According to Brady’s aides, the number he cited is pulled from a study released last year by the American Petroleum Institute, an industry trade and lobbyist group. The study estimated that a ban on new and existing leases would cost nearly 1 million jobs by 2022, with top production-states hit the hardest. While Texas would lose 120,000 jobs, New Mexico would lose 62,000 and Wyoming would lose 33,000, the study says. 

But the Biden administration’s moratorium on federal land leasing halts only new leases from being issued.

Brady’s tweet misses this distinction. He said that the ban on new leasing would cost Texas 120,000 jobs, while the study he cited totaled losses tied to banning both new and existing leases.

The petroleum institute hasn’t released estimates of how many jobs will be impacted by Biden’s order. Another group, the Wyoming Energy Authority, released a study last month that determined a ban on new leasing alone would impact 58,700 jobs in the eight states that make up the majority of public land production, which does not include Texas.

However, an American Petroleum Institute spokesperson said it's reasonable to expect the administration will expand the ban to include existing leases as well. 

"We view this as a first step toward a federal leasing ban that would impact all oil and gas development on federal lands and water," said spokesperson Bethany Aronhalt. 

This expectation is based on numerous remarks the president has made on the issue. For instance, during a 2020 primary debate, Biden said "no more drilling on federal lands. No more drilling, including offshore. No ability for the oil industry to continue to drill, period — ends." And Aaronhalt highlighted how Biden's nominee for interior secretary, environmentalist and progressive Deb Haaland of New Mexico, has been unequivocal in her opposition to leasing federal lands and waters to the industry. 

"I am wholeheartedly against fracking and drilling on public lands," she told The Guardian in 2019. "Public lands are a statement about who we are as Americans. The most pristine and beautiful places in our country should never belong to one person."

If Biden did ban all federal leasing — new and existing, onshore and offshore — does Texas stand to lose 120,000 jobs by 2022? 

"Most of the Texas impact is due to closing development of the Gulf of Mexico, of the offshore" drilling, said Geoff Brand, Senior Economic Advisor at the American Petroleum Institute. 

Drilling in the Gulf of Mexico supports about 300,000 jobs, according to a Bureau of Ocean Energy Management estimate. This figure represents both jobs created directly by industry — like offshore drilling, platform construction and platform staffing — and the jobs indirectly created by the industry, like service companies and other onshore support operations. In economic terms, the 300,000 figure represents jobs created by the industry’s direct, indirect and induced economic impacts. 

That workforce is sourced primarily from Texas and Louisiana, each of which contribute about 150,000 workers to the offshore industry, Brand said. The projected 120,000 Texas jobs lost due to a possible ban on new and existing federal leases would impact roughly 80% of Texas’ offshore workforce. 

This figure is so high, Brand said, because most jobs are created when the industry spends capital up-front on drilling new wells and constructing new platforms. A complete ban on new leasing or permits would grind that development to a halt. 

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"If you stop drilling and expanding, then you’re just maintaining production platforms," Brand said. "It's kind of like building a pipeline — you get most the jobs up front when you spend the capitol and build things. It’s when you spend the money that the jobs are created. ... If you're maintaining a platform, you're spending some operational money, but you're not really spending that much." 

The American Petroleum Institute’s study is based on the National Energy Modeling System, a model of domestic energy markets created by the U.S. Energy Information Administration. The model bases employment numbers on the industry’s rate of spending. The harder it becomes for producers to obtain leases and permits, the less they’re spending on development, which, as a result, sheds jobs.  

The methodology behind the institute’s analysis is unobjectionable, according to Karr Ingham, a petroleum economist with the Texas Alliance of Energy Producers. 

"If that activity is just stopped wholesale, what do you think's going to happen to those jobs?" he said. 

"Even someone who's utterly opposed to energy production, offshore production, federal lands production, whatever the case may be, taking issue with the way they went about this (analysis) would be a difficult proposition. They started with a sound model and went through sound processes to end up with state-level impacts," Ingham said. 

Although the industry will adjust to Biden’s directive by reallocating resources to drilling on non-federal lands and waters, those adjustments will be gradual and may not impact short-term economic projections.  

Similarly, it will take time for jobs in the fossil fuel industry to be replaced by jobs created in new energy sectors. The administration has stressed the importance of green job creation as it shrinks the fossil fuel sector. Biden’s Build Back Better economic recovery plan pledges to "create millions of good-paying union jobs" by building a "clean energy economy." 

But Ingham says it will take time before these new industries are replacing lost fossil fuel jobs on a one-to-one ratio. 

"If a job gets lost some time in the next 12 months, what are you going to replace that job with? Where are those folks going to go" Ingham said. "It's not like for every job you eliminate in the oil and gas sector, a green energy job springs up on the other side." 

Anticipating Biden’s move to ban leasing on federal lands and waters, Brady said that a permanent ban on new leasing will cost Texas 120,000 jobs. 

Brady pulled that number from a report released last year by the American Petroleum Institute. However, the institute said that the 120,000 figure is based on a ban of both new and existing federal leases, which is more far-reaching than Biden’s actions so far. Brady’s comment ignores that distinction.  

Otherwise, the 120,000 job losses projected by the institute’s analysis is accurate given that it was based on modeling from the federal National Energy Modeling System. 

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