The Department of the Interior announced an aggressive move to cancel the seven remaining oil and gas leases in Alaska’s Arctic National Wildlife Refuge. This polarizing decision to hamper a significant portion of Alaskan oil production was announced on September 6, 2023.
While some have praised the move as bold and innovative, others have opposed the Administration’s actions. Naturally, the Biden-Harris Administration claims this move is a significant step to protect the wildlife and landscape of over 13 million acres in the Alaskan wilderness. However, the economic and energy ramifications of such a brash move could prove to be more than the President bargained for.
Biden Administration Cancel Last 7 Oil and Gas Leases in Alaska’s Arctic Refuge
The drastic initiation by the Department of the Interior is one of the largest in history, according to the department’s press release. Within this lease cancellation, the last remaining seven oil and gas leases in the ANWR will be revoked, forcing the cessation of oil production across over 13 million acres.
The Alaskan oil and gas lease cancellation overturns actions made by former President Trump, which enabled the production during his final days in office.
The area in question is home to many Alaskan wildlife, such as polar bears, caribou, migratory birds, and other indigenous species. Claiming this act will help unequivocally protect the wildlife and landscape of the Alaskan National Wildlife Reserve, the Department of the Interior is aggressively reducing oil extraction from the Alaskan wilderness.
Alaska is the fourth largest oil producer in the United States, following Texas, New Mexico, and North Dakota. The oil industry in Alaska not only helps provide for the nation’s energy grid but promotes economic growth among the tribespeople and citizens of Alaska. The monumental oil reserves in Alaska are a vastly untapped resource with the potential to supply American households with much-needed energy security. Slashing oil production in Alaska could prove to be a detriment to America’s energy stability.
President Prevents Future Leases in NPR-A
In addition, the department proposed new regulations for the National Petroleum Reserve in Alaska (NPR-A) that would protect millions of acres within the reserve from being granted future leases. This further action covers approximately 2.8 million acres of the Buford Sea, preventing future oil and gas leases within the entire United States Arctic Ocean.
Secretary of the Interior, Deb Haaland, stated, “With climate change warming the Arctic more than twice as fast as the rest of the planet, we must do everything within our control to meet the highest standards of care to protect this fragile ecosystem, President Biden is delivering on the most ambitious climate and conservation agenda in history.”
No one can argue that conservation actions are undoubtedly ambitious. However, as with any rapid transition, there are potential pitfalls and significant downsides to consider.
Conflicting Messages
This aggressive revoking of oil and gas leases follows the controversial Willow Project, which Biden approved earlier in 2023. The Willow Project, which allowed nearly 180,000 barrels per day to be extruded from Alaska’s petroleum-rich North Slope, was criticized by environmentalists yet praised by the oil and gas industry.
As the President continually wages war on oil and gas production, his actions contrast his approval of the Willow Project and his claims that oil and gas will “be necessary for at least the next ten years.”
Despite the President’s assertions, he has continually made every effort to squelch the oil and gas industries out of business through regulations and lease cancellations. The conflicting actions by the administration are sending a clear message: the President will do everything within his power to eliminate oil and gas production in the United States.
Naturally, the scrapping of oil and gas leases in Alaska is controversial, to say the least. Republicans, oil and gas investors, and the Alaskan government have all thrown up protests against the radical move by the President.
Therein Lies The Issue
Republicans have raised concerns that a sweeping elimination of oil production within the ANWR too quickly could have drastic economic challenges for the Alaskan people and the national energy sector. The oil and gas industry is a major promoter of the global economy. Rapidly eliminating a significant source of oil production could lead to economic disruptions, including losses in industries related to transportation, manufacturing, petrochemicals, and countless others.
The cost to replace the energy produced by the oil from the ANWR could lead to an excessive rise in everyday energy costs, destabilizing national energy security. As energy costs continue to rise, decimating the oil supply in Alaska could be detrimental to American taxpayers.
The economic potential repercussions are equally relevant to the national and local frontiers, as many of the indigenous people in Alaska rely on the economic stimulation that comes with oil extraction within the state. The NPR-A is home to over 40 unique people indigenous communities alone. Preventing the economic growth and provision that the oil industry provides in the area could significantly harm their livelihood.
Despite the administration’s consistent rhetoric about helping minority groups and promoting racial equality, the oil and gas lease cancellation communicates an alternate position. Communities and individuals whose lives are directly impacted by drastically reducing oil production may face significant challenges moving forward. This could lead to social and economic disparities, devastating for the Native American tribes in the Alaskan wilderness. According to the Bureau of Indian Affairs, the Tynoek Indians of Alaska are one such tribe that rely on oil leases on their lands to provide for their people.
How Will the Energy Deficit Be Filled?
So, since oil production will take a massive hit from these cancellations, how will the American people recoup the loss of energy Alaskan oil provided? The Biden Administration proposes that renewable energy will be sufficient to supply the electricity grid. However, the energy transition is very much in progress and inadequate to meet the nation’s power needs.
According to CNBC, renewable energy resources are only on track to produce about half of the growing world’s energy consumption needs. While we all must do our part to protect against climate change and push clean energy production progress forward, the technology is not where it needs to be to create a sustainable power grid from renewable energy alone. The energy gap created by smothering Alaskan oil production will devastate the United States’ energy security.
While great strides have been made toward promoting renewable energy facilities and production, Americans still depend primarily on fossil fuels to supply their energy needs. The fact is Alaska and America as a whole are not prepared to transition entirely to renewable energy all at once.
“A Clear Violation of the Law”
Many have raised valid points against the President’s actions, calling them reckless and unlawful. Naturally, such a polarizing decision is met with opposition. Many Alaskan officials and oil and gas representatives have quickly moved toward litigation to counteract the Department of the Interior’s decision.
In an interview with Alaska News Source, Governor Mike Dunleavy calls Biden’s lease cancellation a “clear violation of the law.” Governor Dunleavy further says these actions are not surprising, given the “53 or 54” other actions taken against Alaska by the Biden-Harris Administration. The Alaskan governor fears this action does not bode well for Alaska, the nation, and the people who rely on oil to power their cars and heat homes. Governor Dunleavy asserts that the state will be forming a legal team to pursue legal action against the cessation of oil production in Alaska.
Kara Moriarty, CEO of the Alaska Oil and Gas Association, says the President’s decision is further evidence of “a constant barrage of attacks on their industry.” Moriarty made it clear that she finds the least cancellations a major detriment to American energy stability, stating that now is when we should focus on producing more oil here as the demand continues to increase.
Alaskan History of Responsible Oil Exploration
Governor Dunleavy asserts that canceling the oil leases in Alaska will drive oil purchasing from overseas, where the environment may not be as well protected or regulated. The governor claims that Alaska has a rich history of responsibly drilling and exploring oil resources with the environment in mind. He further claims that “Alaska does it better than anyone” about responsible drilling.
Unfortunately, the danger of forcing oil production overseas could have a much larger impact on climate change than environmentalists care to acknowledge. As the situation continues to evolve, we can be sure that oil investors will closely monitor the outcome.
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