Oil industry continues to cry wolf while racking up profits
While attacking temporary pause on public lands leases, companies tout significant 1st quarter gains
When President Joe Biden took office, he quickly fulfilled a campaign promise by placing a temporary pause on offering new public lands oil and gas leases to allow the Interior Department to examine the broken system for drilling on our public lands and offer recommendations for how it could best benefit our communities, climate, and taxpayers. Reflexively, the oil industry attacked this commonsense step, alleging it would kill jobs and hurt local economies. A brief review of oil company earnings reports shows that the industry was not only wrong in their claims, they are seeing a surge in profits.
Over the past decade, the oil industry invested heavily in new development, racking up massive debt while rarely turning a profit. Faced with plummeting demand during the coronavirus pandemic and international trade wars, the industry cratered in 2020, shutting down drilling rigs and laying off workers. Now, however, it appears oil companies are rebounding, thanks to increased demand. According to filings to the Securities and Exchange Commission covering the first three months of 2021, many major oil companies are seeing sharp increases in earnings, and in most cases beating analyst expectations.
The filings are just the latest confirmation that the oil industry will be largely unaffected by the Biden administration’s pause on new public lands leasing. After all, the industry currently holds leases to 20.9 million acres of public lands across the West, 47% of which are sitting idle. Further, oil companies currently hold roughly 7,700 approved, but unused, drilling permits. In previous SEC filings and shareholder conference calls, multiple oil industry CEOs confirmed that they will be unaffected by the leasing pause.
In February, the head of oil giant ConocoPhillips, one of the largest producers on federal lands, addressed the pause directly during an earnings call with investors, even speculating about the potential impact on the company if the Biden administration went even further and ordered a moratorium on new drilling permits, not just leasing public land. The message from chairman and CEO Ryan Lance was unequivocal: “ConocoPhillips has the flexibility, the diversity and the depth of low cost of supply and low-GHG resource to manage through this issue without materially impacting our plans.” Billy Helms, the Chief Operating Officer of EOG Resources, told an investor conference that the company already has at least four years’ worth of drilling permits on national public lands. “When it comes to access to federal lands, that’s one of the things we’re not really worried about in our business,” Helms said. He added that EOG has “a lot of potential outside of federal land, too.”
The current system for drilling on our public lands is egregiously broken, benefiting oil companies at the expense of communities and our climate. It is incumbent on the Biden administration to take a hard look at how we can overhaul the system to ensure our public lands are part of the climate solution, rather than part of the problem, all while conserving our natural heritage for future generations and supporting local economies. The most recent financial data shows that the oil industry is not only surviving during this commonsense review, they are profiting.
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