Analyzing Willow Project Approval: Biden's Oil Drilling Stance and Energy Security
In this post, we'll take a closer look at why Biden approved the Willow Project and what it could mean for the US. We'll also talk about energy security and how it played a role in this decision.
While everyone was talking about the SVB scandal and how it could affect the banking system, there's another news story that caught our attention. President Biden recently gave the green light to the Willow Project, a big oil project that will happen mostly in the Arctic Circle. This is a big deal because during his campaign, Biden promised to stop all new drilling on federal lands. When he first took office, he even suspended the Willow Project. But then, gas prices started going up because of Russia's invasion of Ukraine, and Biden felt pressure to find solutions. So, he decided to approve the Willow Project and encouraged oil companies to drill on their existing federal leases instead of getting new ones. While Biden wants to make smart decisions about oil drilling, approving the Willow Project shows that he's changed his mind about it. In this post, we'll take a closer look at why Biden approved the project and what it could mean for the US. We'll also talk about energy security and how it played a role in this decision.
*Authors’ Note: Please note that this blog post is for educational purposes only, and we do not express any personal opinions on the political dynamics surrounding the Willow Project approval or the energy industry. We strive to present a neutral analysis of the situation to provide our readers with a better understanding of the issues at hand.
The Willow Project
Back in 2016, ConocoPhillips found a huge oil deposit in the National Petroleum Reserve-Alaska area. This discovery was a big deal because it led to the development of the Willow project. The project is expected to produce around 180,000 barrels of oil per day, which is a lot in the energy world. It's also supposed to produce around 600 million barrels of oil equivalent during its lifetime. 1 The proposed drilling is the largest on US public land and the largest oil field in Alaska in decades, according to Alaska Republican Senator Dan Sullivan, who described the project as "one of the biggest, most important resource development projects in our state's history." 2 The Willow project has the potential to significantly impact the energy landscape of Alaska and the US as a whole.
Even though the Biden Administration gave the green light to the Willow Project, there are still a bunch of arguments for and against it. Let's start with the “for” arguments. The Willow Project has the potential to do a lot of good things for Alaska and the whole country. The people who support it say that it will create jobs, build new roads and pipelines, and give the local economy a boost. Plus, we still need oil to keep our country running, and it's important to have domestic sources of it. With everything that's been going on in the world lately, we need to make sure we have enough oil to keep us going, and the Willow Project can help with that. Conoco Phillips also made some deals with local communities and environmental groups to reduce the number of drilling sites from five to three, which means the project will have less of an impact on the environment. In the end, even though the Willow Project isn't as big as they originally wanted it to be, it can still bring a lot of good things to the US.
Source: Willow Fact Sheet
Now let's talk about the people who are against the Willow Project. Environmental groups are worried about the long-term effects that drilling could have on the environment. They think that it could really hurt the land and the biodiversity in the region, which would cause even more problems down the road. Groups like Earthjustice and Trustees for Alaska have even filed complaints against the Biden administration's Department of Interior, the Bureau of Land Management, the US Fish and Wildlife Service, and other federal agencies. Earthjustice lawyers are specifically worried about how carbon emissions from the project could hurt endangered species. They say that the government didn't do enough to think about this before approving the project. Several lawsuits have been filed against the US government by environmental groups, who say that the government's approval of the drilling plans breaks the National Environmental Policy Act and other laws. 3 Given these environmental concerns, it is essential to consider the long-term consequences of the Willow Project's implementation.
Energy Security in the US
Energy security is a critical component of the global economy as it encompasses a multifaceted process of balancing security, price stability, and transitioning to alternative sources. Recent geopolitical events, such as the Russian invasion of Ukraine, have significantly reshaped the global energy landscape and highlighted the importance of energy independence. Countries that can produce sufficient energy domestically are more resilient to external supply shocks, making the achievement of energy independence essential for ensuring a secure and stable economy. Additionally, it strengthens the nation's position in foreign policy matters by reducing its dependence on foreign energy sources. 4
The US felt the impact of the invasion as we battled climbing gasoline prices. In an effort to bring them down, President Biden and U.S. Energy Secretary Jennifer Granholm have called on oil and gas companies to increase production and released 180 million barrels of oil from the nation's Strategic Petroleum Reserve (SPR). The SPR, which is the world's largest supply of emergency crude oil, was created in response to the 1973 oil embargo by some members of the Organization of Petroleum Exporting Countries (OPEC). It is contained in four federally-owned sites along the Gulf Coast and helps the government keep the price of petroleum products stable by distributing crude oil to refineries in the event of temporary shortages. The release of oil from the SPR, according to an analysis from the Department of the Treasury, helped lower the price of gasoline in the US by an estimated range of 13 to 31 cents per gallon from March to July of 2022. This means that without the release of crude oil from the SPR, gasoline prices could have been anywhere between 13 to 31 cents higher per gallon. Ultimately, the US was able to rely on our own reserves to aid in combatting rising prices. 5
Achieving energy independence has been a long-standing goal for the United States. In the past decade, domestic energy production has increased faster than any other time in history. This growth is due to various factors, such as advancements in drilling technology, increased investment in renewable energy, and the expansion of domestic oil and gas production. However, to continue this growth and achieve energy independence, the US must focus on growing the entire American energy portfolio rather than fixating on any single form of energy generation. In an interview with Fatih Briol during Davos 2022, the former executive International Energy Agency (IEA), he expressed that the long-term answer is not to replace fossil-fuel supplies but instead to focus on the energy transition. 6
Conclusion
The approval of the Willow project has put a spotlight on the challenges of balancing environmental concerns with economic growth in the energy sector while considering the broader macro environment. While the oil industry plays a crucial role in the US economy, there are mounting concerns about climate change and environmental sustainability, leading to calls for a shift to cleaner, renewable energy sources. As Biden's administration navigates this complex landscape, it will need to carefully weigh the benefits and drawbacks of such projects and ensure that responsible and sustainable policies are put in place. It remains to be seen what the impact of the Willow Project will be on the US energy sector and the environment, but it's clear that this decision represents a significant shift from earlier promises and will be closely monitored by both supporters and critics alike.
Sources
https://static.conocophillips.com/files/resources/23copa013-willow-fact-sheet-v5-final.pdf
https://www.reuters.com/business/energy/biden-will-give-remarks-thursday-efforts-lower-gas-prices-white-house-2022-03-31/
https://www.weforum.org/agenda/2022/05/first-global-energy-crisis-how-to-fix-davos-2022/