Restricting Domestic Oil and Natural Gas Production Leads to Negative Environmental Outcomes
Report by David Kreutzer for The Institute for Energy Research (IER) – 15.02.23
WASHINGTON DC (02/15/23) – The Institute for Energy Research has released a new report comparing the environmental quality of the major oil-producing countries.
For many years there has been a political movement centered in North America and Europe seeking to halt oil and gas production in the countries of those regions. Proponents claim this effort is justified in the name of protecting the environment and saving the earth from climate change, but this political movement has done little to eliminate the need for those products in developed countries.
Nearly every facet of modern developed economies requires petroleum products and natural gas to function and provide the comfortable lifestyles that citizens of developed countries have come to expect. These resources are necessary for agriculture, heavy industry, transportation by all modes – road, rail, air, or ship – and a great number of the products that we now take for granted. They’re ingrained in almost everything. Thus, efforts to reduce or eliminate oil and gas production in developed countries will simply shift production to other countries in order to meet ongoing global demand.
The great irony is that this political movement which purports to be about protecting the environment results in oil and natural gas production moving from countries with the highest environmental standards to countries with lower, or even functionally zero, environmental standards.
As the report notes:
“The contradictions of this approach are most apparent in the case of the United States, the largest producer of both oil and natural gas in the world. Reductions or limitations on domestic U.S. oil production must be made up for with production elsewhere in the remaining major oil producing countries, which have far lower environmental standards than the U.S.
This paper quantifies that environmental gap by creating an environmental quality score, weighted by production, for oil and gas production in countries around the world using the well-known Environmental Performance Index (EPI) produced by Yale University. The results show that purely as a matter of environmental protection, replacing U.S. domestic production with foreign supply would be an overwhelmingly negative tradeoff.”
Key Facts and Figures:
For the 20 largest oil producing countries outside the United States, the average EPI environmental score, weighted by liquid fuels production, is 39. When compared to the U.S. EPI score of 51.1, it means the average barrel of non-U.S. petroleum is produced in a country with an environmental score that is 23.6% lower than that of the U.S.
For the 20 largest non-U.S. natural gas producers, the average EPI environmental score weighted by production is only 38.6. So compared to the 51.1 EPI score of the U.S, the average bcf of natural gas is produced in a country with an environmental score that is 24.5% lower than that of the U.S.
The United States, the world’s largest producer of both oil and natural gas, is only outranked on environmental quality by 3 of the top 20 oil producers and 3 of the top gas producers, but none of those countries produce even one quarter of the volumes of oil or natural gas coming from the U.S.
Indeed, all oil production from countries scoring higher on environmental quality amounts to only 35.7% of U.S. production, and that from gas producing countries is only 33.4% of U.S. production. The sheer size of U.S. production combined with its excellent environmental standards means that U.S. production disproportionately reduces the environmental harms of oil and gas production on a global scale.
U.S. production of crude oil and natural gas has increased over the last 40 years, while at the same time pollution and emissions have steadily declined across sources.
Contrary to popular media characterizations, wealth created by energy development in free economies enhances environmental performance while making people’s lives better.
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