The Oil Industry Has More To Fear From Elon Musk Than It Does Joe Biden

President Biden’s ambitious climate proposals are facing a headwind from the oil and gas industries. Now is the time to confront the most existential threat to the American economy, he implores — because this is something that can be achieved while creating new prosperity.

It’s a long-running debate — whether to rely on the traditional fossil fuels or to turn to the new economy for relief. In other words, will drilling for more oil and gas build wealth and jobs or will generating more electricity from wind, solar and battery storage provide greater economic opportunity? Each side is armed with the data to support its positions. But one hard truth remains: last year tied with 2016 for the hottest on record and unless nations get their arms wrapped around climate change, the consequences could be alarming. 

“Energy abundance or foreign dependence. American jobs or overseas jobs. Economic revival or small-town decline. Progress or retreat,” says Mike Sommers, chief executive of the American Petroleum Institute, at an event hosted by the United States Energy Association on Thursday. “Thus far, President Biden is on the wrong side of a number of these consequential choices.”

Biden wants the nation to be carbon-neutral by 2050 — a move that would require it to shift away from using fossil fuels and toward consuming more renewables. He has pledged to create an all-electric federal vehicle fleet while also promising to help communities that suffer from the economic transition. 

While the greening of America got its footing with the Obama-Biden administration, it gained traction in the intervening decade, mostly through markets. Consider that dozens of utilities have plans to achieve net-zero targets: Dominion Energy, Duke Energy DUK , Entergy Corp. ETR , Public Service Enterprise Group PEG and Xcel Energy XEL have made such promises. 

“We’re going to make sure that nobody is left behind,” Gina McCarthy, climate coordinator for the administration, told reporters. “We need to put people to work in their own communities. That’s where their home is. That’s where the vision is. So we are creatively looking at those opportunities for investment so that we can get people understanding that we are not trying to take away jobs.”

The Resistance

Change doesn’t come easily. President Biden, for example, has paused drilling on federal lands for 60 days, which is something he promised time-and-again during the campaign. Most such shale oil and gas development occurs on privately-owned lands. But the oil and gas industry has said that with 6.7% unemployment, now is not the time to carry out such a policy. API’s Sommers points to New Mexico, where he says a federal leasing ban could cost 62,000 jobs while also eliminating $1 billion in from the state’s budget. ExxonMobil Corp. XOM and Chevron Corp. CVX are actively drilling on federal lands in New Mexico. 

Similarly, Sommers said that shutting down the construction of the Keystone Pipeline has immediately cost 1,000 temporary jobs. But energy economists say that current oil prices do not support the completion of the $8 billion pipeline. At the same time, there are now two competing pipelines proposed by Enbridge ENB and Kinder Morga KMI n, which would create an oversupply of oil and would thus further drive down prices. 

Sommers emphasizes that the petroleum industry wants to work closely with the Biden administration — that the sector has done much to curb potent methane releases from its operations. Meantime, the export of liquefied natural gas is bringing cleaner natural gas options to Asia and to Europe. “Our industry can continue lowering emissions while supplying the energy our nation needs.”

According to the U.S. Energy Information Administration, natural gas now makes up 38% of the electric generation portfolio while coal comprises 22%. Nuclear is about 20%. Wind and solar make up 17% of it, although most new plants in 2021 will be fueled with renewables. Petroleum is almost exclusively used for transportation.

The American Gas Association told the conference that methane emissions have dropped by 73% since 1990 even as natural gas utility companies added more than 760,000 miles of pipeline. Moreover, a 1% increase in “fast-reacting” fossil fuel technologies leads to a .88 percent increase in green energy over the long run; natural gas plants automatically kick on if the sun stops shining or the wind stops blowing, according to the National Bureau of Economic Research. 

So, the oil industry is the under the most heat and the one that feels most threatened by Biden’s moves. But should it? Only about 9% of all fracking is done on federal lands. And Biden’s focus is on stopping the development of new wells, not preventing existing well from being tapped. Altogether, such drilling netted the federal government $6 billion in revenues last year, the Interior Department said. 

Progress up the Street

The biggest threat to oil comes not from climate regulation or slowing development. It is coming from electric vehicles. Even the world’s biggest oil producing nations are getting ahead of this curve. Arshad Mansoor, chief executive of the Electric Power Research Institute, which is an independent research organization, told attendees that 6-in-10 vehicles sold by 2030 could possibly be electric cars. BloombergNEF figures that 10% of all new cars will be electric by 2025, although they will be 28% by 2030 and by 58% by 2040. 

Beyond that, Mansoor said that the electricity sector now accounts for a fifth of all energy consumed in the United States. By 2040, he said that it would be double that: 40%. And electrifying the U.S. economy can facilitate the use of alternative energies and cut emissions. To get there, he told the audience that the electric grid has to become more robust — to handle as much as four-times the wind and solar as it does now. EPRI is collaborating with the Gas Technology Institute to achieve zero or near-zero carbon emissions by 2050 under the so-called Low-Carbon Resources Initiative. Together, they expect to leverage $100 million and to work with 100 companies. 

The utility sector, of course, is eager to electrify the economy — something that accrues to its bottom line. The average electric vehicle requires 30 kilowatt-hours to travel 100 miles — the same amount of electricity an average American home uses each day to run appliances, computers and lights as well as heating and air conditioning, according to Pew Research. 

In the end, it is about what is in the collective interest of consumers and the environment. And a study titled “U.S. National Electrification Assessment” concludes customers will be paying less while emissions levels will improve. “We are pleased the Biden administration is rejoining the Paris agreement,” says Tom Kuhn, chief executive of the Edison Electric Institute, at the conference. “We support the idea of additional EV fleets and charging infrastructure.”  

As the effects of climate change impact communities, the pressure is building on public officials to mitigate the harm. Joe Biden is trying to accelerate what he and President Obama had previously started: the New Energy Economy. His mission is easier, though, as most Americans have bought into the need to limit CO2 emissions while the cost to enable such progress is getting cheaper. And as President Biden sees it, the timing couldn’t be better — “where conscience and convenience cross paths, where dealing with this existential threat to the planet and increasing our economic growth and prosperity are one and the same.

“When I think of climate change and the answers to it, I think of jobs,″ Biden said. “These aren’t pie-in-the-sky dreams. These are concrete actionable solutions. And we know how to do this.″