Ban On Russian Oil Not Likely To Help Wyoming Industry Unless Biden Lifts Restrictions on Federal Lands

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By Clair McFarland, Cowboy State Daily

A presidential ban on the import of Russian petroleum products could help Wyoming, according to experts, if the federal government would lift its own restraints on American producers.  

“We’re obviously in agreement with (President Joe Biden’s) decision to ban Russian oil,” Ryan McConnaughey, vice president of the Petroleum Association of Wyoming, told Cowboy State Daily on Wednesday. “But we’ve seen several actions by the administration that have hindered the ability to develop, specifically on federal lands.”  

Russia had contributed about 8% of America’s petroleum products, including 3% of its crude oil supply. On Tuesday, Biden announced he had banned the import of Russian oil in retaliation for Russia’s invasion of the Ukraine. 

But Wyoming’s oil industry probably won’t be a big player in making up the difference in the national oil supply, said McConnaughey, because it depends heavily on the availability of federal lands for production.  

The leasing of federal land for oil development has ceased under the Biden administration despite a June court order to revive U.S. Bureau of Land Management oil leasing on federal lands. The permitting process is under a severe backlog as well.

Wyoming tops the nation for natural gas production on federal lands and is second only to New Mexico for oil production on federal lands, said McConnaughey. 

Instead of Wyoming, energy development companies have been setting up shop in states with more state- or privately-owned land, he continued, to avoid the federal permitting shutdown.   

No Leasing, No Permitting 

The administration has offered no federal land parcels for lease since December 2020, McConnaughey said, in violation of federal law. In addition, the BLM has not approved any permit applications for production on federal lands since last fall.

The Biden administration in June was ordered by U.S. District Court Judge Terry Doughty to lift its moratorium on federal leasing, but still has not complied.  

There are about 4,600 permits to drill awaiting federal approval nationwide, said McConnaughey.  

“Those companies cannot drill on those lands without those permits,” he added.  

Wyoming’s share of the ungranted permits nationally is about 10% at 469 – putting the state in second place after New Mexico, which has 3,809 ungranted permits caught up in the federal system.  

“I think immediately, the administration could work to streamline getting those permits approved, to get more oil on the market,” said McConnaughey.  

Too Little Too Late? 

But former Wyoming Sen. Eli Bebout worried that even if the Biden administration did change course with the leases, it may be “too little too late.”  

“If (Biden) all of a sudden woke up tomorrow and became a reasonable person and recognized the value of our domestic oil and gas industry, you just can’t turn the switch on,” said Bebout, the owner of Nucor Oil and Gas.

He added any substantial production increases from allowing leasing and permitting immediately likely wouldn’t be seen in Wyoming for another six months to one year, because of the slow process of hiring qualified workers and establishing rig sites.  

“If he’d let (the embargos) go, like, a year ago, we would be able to do a lot better, and I don’t think we’d be suffering the high gas prices we are,” Bebout told Cowboy State Daily.  

Wyoming’s average unleaded gasoline price Wednesday was $3.92 per gallon, an increase of 44.4 cents from one week ago and a jump of nearly $1.19 from last year.  

Bebout stated that there’s “no way” Wyoming would have a substantial role in making up the lost 8% of petroleum products caused by the Russian oil ban, even if the federal restrictions were lifted. 

“It’s not going to have an impact in terms of what the Russian deal does,” said Bebout, adding that the more noticeable benefits in a less restrictive market would be increased state revenues and a better job market. 

Biden Rallies for ‘Clean Energy’ 

Wyoming Gov. Mark Gordon and 25 other state executives asked Biden on Friday to remove bans on new oil and gas development on federal lands and restart the halted Keystone XL pipeline project.  

“People in our states cannot afford another spike at the gas pump, and our allies cannot afford to be held hostage by (Russian President Vladimir) Putin’s tyranny and aggression,” reads a statement by Gordon’s office. 

Biden in a Tuesday statement on Twitter, resisted calls to unburden domestic oil producers.  

“Loosening environmental regulations won’t lower prices,” wrote Biden. “But transforming our economy to run on electric vehicles, powered by clean energy, will mean that no one will have to worry about gas prices. It will mean tyrants like Putin won’t be able to use fossil fuels as a weapon.” 

Europe Hurting 

According to The Associated Press, the European Union this week will commit to phasing out its reliance on Russia for energy needs as soon as possible. Europe relies on imports for 90% of its natural gas and 97% of its oil products. Russia supplies 40% of Europe’s natural gas and a quarter of its oil. 

The U.S. does not import Russian natural gas. 

Bebout said Russia’s invasion of Ukraine has been a “travesty,” but he worried that the American minerals sanction and other importation bans worldwide would hurt the Ukrainian and Russian civilians far more than the Russian ruling class.  

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