President Joe Biden signed executive actions last week prioritizing solutions to the “existential threat” of climate change, drawing the ire of many key players in the politically powerful oil and gas industry.
Biden’s actions pressed pause on the leasing of federal lands and waters for oil drilling, set a goal of keeping 30 percent of federal lands for conservation purposes and announced the electrification of the federal government’s fleet of vehicles. The move comes a week after Biden revoked the permits for the controversial Keystone XL pipeline just hours after his inauguration, following through on a campaign-trail promise.
Leading up to the 2020 election, the oil and gas industry contributed around $1.6 million more to former President Donald Trump than to Biden. Trump painted himself as an ally to the industry on the stump and throughout his presidency — though industry insiders told Politico in 2020 that the Trump administration was “a mixed bag” and “more like ‘meh’” than the windfall they had hoped for in 2016.
The oil industry spent millions in 2020 to try to keep a GOP majority in the Senate. Valero, Chevron and ConocoPhillips, among the few corporations that give to super PACs, gave at least $1 million each this election cycle to the Senate Leadership Fund, a conservative super PAC that spent $271 million to campaign against Democrats vying for the Senate.
Pausing Land and Later Leases “to the Extent Possible”
Biden’s decision to halt future leases of federal land, pending a comprehensive review of the climate impact, caused an uproar among oil and gas companies and trade associations. Just hours after Biden formalized the order, the Western Energy Alliance announced it would sue the Biden administration, alleging the move violates existing law.
Most drilling occurs on private land, rather than federal property. In 2017, approximately 24 percent of oil and 13 percent of natural gas extracted in the United States came from federal lands. According to analysis by the U.S. Geological Survey, around a quarter of U.S. emissions come from the combustion and extraction of resources from federal lands.
Oil and gas companies rushed to stockpile drilling permits during Trump’s lameduck period — doubling the number of permit requests over the same period in 2019, according to an AP report. Under Biden’s order, oil and gas companies can continue to obtain new permits to drill on land that has already been leased.
Experts say the executive action likely won’t immediately impact rates of oil extraction in the U.S. As of 2019, there were 38,294 leases active across the country, concentrated mostly in the American West. Once a lease has been issued, companies have 10 years to begin production on the land before the lease terminates.
The oil and gas industry’s leading trade association, the American Petroleum Institute, came out against the order. API President Mike Sommers criticized Biden’s suspension of federal agencies’ authority to issue leases of federal land to drilling companies in a Jan. 21 statement.
“Restricting development on federal lands and waters is nothing more than an ‘import more oil’ policy. Energy demand will continue to rise — especially as the economy recovers — and we can choose to produce that energy here in the United States or rely on foreign countries hostile to American interests,” Sommers said.
In 2020, API’s PAC spent $88,200 to support Republican candidates, giving $5,000 to the Great America PAC, a Trump-aligned Carey committee. API also dropped $5.3 million to employ 40 lobbyists, reporting lobbying 66 individual bills. The institute’s lobbying spending fell during Trump’s administration after trending upward throughout former President Barack Obama’s two terms in office.
Another leading oil and gas industry association, the Independent Petroleum Association of America, has also come out in opposition to the action.
“We think it was really misguided,” Senior Vice President for Government Relations Dan Naatz told an Arkansas TV news team. “It impacts jobs and economies through the inner-Mountain West, all the way through the country.”
In 2020, the organization’s PAC spent $215,300 in campaign contributions, giving $10,000 each to Sens. Steve Daines (R-Mont.), Thom Tillis (R-N.C.), and former Sens. Cory Gardner (R-Colo.) and Martha McSally (R-Ariz.).
Biden framed the executive action as a jobs package, remarking, “today is climate day in the White House which means today is jobs day at the White House,” just before he signed the executive actions. Labor leaders say they are waiting to hear how exactly Biden will replace jobs lost in energy sectors.
“It’s too glib and easy to say someone working in the mines can get a solar job. That is too simplistic,” Jason Walsh, executive director of the BlueGreen Alliance, told the Washington Examiner. “There is a mismatch between where energy jobs are getting lost and where they are created. We have to close that gap, but we also have to be real and help economies diversify their economies in ways based on their own assets.”
Oil corporations emphasize that gap. The Global Energy Institute, a subsidiary of the U.S. Chamber of Commerce, came out against some of Biden’s climate actions, claiming it would lead to widespread unemployment.
“Without the prospect of future leases, investment and planning will begin to dry up immediately, thwarting job creation and the economic growth at the worst possible time,” the Institute’s President Marty Durbin said in a statement.
The Chamber of Commerce perennially favors Republicans and dropped $5.7 million in outside spending in 2020.
Keystone Canceled, Frustrating Some Oil Companies
The Chamber of Commerce also condemned Biden’s action to cancel the Keystone XL pipeline, a project widely opposed by environmental advocates, indigenous communities and scientists.
“This is a politically motivated decision that is not grounded in science. It will harm consumers and put thousands of Americans in the building trades out of work,” Durbin said.
The Keystone XL pipeline was proposed in 2008, vetoed by Obama in 2015 and promptly re-initiated by Trump in 2016 along with another controversial project, the Dakota Access Pipeline. Environmental and indigenous rights advocates are now calling on Biden to cancel the latter pipeline, which abuts the Standing Rock Indian Reservation.
That pipeline is owned by Energy Transfer Partners, an oil and gas conglomerate that gave more in campaign contributions than any other company in the industry. Ninety-nine percent of its donations went to Republican candidates and committees. In 2020, the company’s co-founder and board chair, Kelcy Warren, donated a whopping $10 million to America First Action, a Trump-affiliated super PAC.
Biden’s climate actions are also drawing criticism from Republican lawmakers from oil-rich states who have benefited from industry contributions. Sens. Jerry Moran (R-Kan.), Steve Daines (R-Mont.), Mike Crapo (R-Idaho), Jim Risch (R-Idaho), John Barrasso (R-Wyo.), Jim Inhofe (R-Okla.), Roger Marshall (R-Kan.) and John Hoeven (R-N.D.) announced Jan. 22 that they would introduce legislation to overturn Biden’s executive action and re-issue permits to the Keystone XL Pipeline, which was slated to pass through Montana, North Dakota, South Dakota and Nebraska before connecting to an existing pipeline in Kansas.
“We came so far during the last administration – from prioritizing American energy development to ending the far-left’s war on fossil fuels,” said Inhofe in a statement announcing the legislation.
Throughout his career, Inhofe has received in excess of $2.2 million in campaign contributions from oil and gas companies. Daines and Barrasso have each received $1.2 million from the industry.
The group’s bill is a symbolic gesture to the industry and its supporters without any real hope of passing the Senate, where Democrats wield a majority, albeit narrowly. The oil and gas industry spent heavily to prevent the upper chamber from swinging blue, giving around $600,000 each to Republican Senate candidates in Georgia Kelly Loeffler and David Perdue, who both lost narrowly to Democratic challengers in January runoffs. The American Petroleum Institute donated $5 million to the Senate Leadership Fund in late November, after every Senate campaign had concluded save the two ultra-expensive Georgia races.
Faced With Pressure from Washington, Other Corporations Look to Adapt
Some energy companies are taking a different tact, announcing plans to adapt their business model to thrive in a Biden administration that prioritizes conservation and climate action.
Industry giant Exxon Mobil announced Feb. 1, just days after Biden’s executive order, that it would initiate massive investments in carbon capture technology aimed at reducing greenhouse gas emissions. The company, whose employees favored Biden over Trump in 2020 campaign contributions, will spend $3 billion over the next five years to build up a new subsidiary business: ExxonMobil Low Carbon Solutions.
General Motors has committed to only manufacturing zero-emissions vehicles by the year 2035, inline with Biden’s commitment to electrifying the government’s fleet. Ford’s new CEO has also pledged to restructure production plans, prioritizing the addition of electric vehicles to its portfolio, which currently features only one fully-electric model.
The American Fuel and Petrochemical Manufacturers, an oil-refining trade association that spent $3.2 to lobby the government in 2019, responded to that provision by reaching out to an unlikely ally: biofuel manufacturers. AFPM reportedly hopes to create an alliance with the competitor industry to lobby Biden to revise his fleet electrification plans in order to include cars powered by low-emission gasoline made from a mix of gasoline and ethanol.