GRAND FORKS — Doug Burgum’s response was predictable when President Biden signed an executive order to suspend oil leasing on federal lands. The governor said in a statement, “This moratorium deals a crushing blow to our country’s economy at a critical time, will drive up the price at the pump for working Americans and sacrifices millions of dollars for schools, hospitals and other key services supported by state and federal budgets.”
All that might be in the future — but Biden’s “moratorium” plays but a small role. As the world turns away from oil, forces more powerful are at play than the presidential pen.
Suspending federal oil leasing and canceling the Keystone XL pipeline are symptoms of this seismic shift, but they are not the only indicators. Nor are they the most important ones.
An early indicator came from General Motors, an automaker whose chief executive said the company would aim to market only “zero-emission” vehicles by 2035. That’s just 14 years from now.
Other indicators compiled from reporting in the New York Times on Saturday, Jan. 30:
- Sales of electric cars have risen 45%, driven by consumer demands.
- As the market moves, so does money. The value of Tesla, the leading maker of electric cars, has grown to be 10 times greater than GM’s.
- Nor is GM alone among old-fashioned automakers — that is to say, those who manufacture gas-powered cars and trucks. Ford has begun delivery of electric models. Other companies have set aggressive but still significant targets to reduce emissions, including electrification targets. Several have signed on to California’s aggressive carbon-reduction goals, including BMW, Ford, Honda, Volkswagen and Volvo.
So now we have money, markets and manufacturers siding with the movement away from oil.
Nor is this movement limited to the United States. If anything, this country is a laggard. China has announced that it will require most vehicles to be electric by 2035. Keep in mind that China is the world’s largest car market. In Europe, Britain, Ireland and the Netherlands have plans to abandon gas-powered cars. They’ll be banned by 2030, just nine years away.
The inescapable conclusion is that the days of the Oil Age are numbered, and the countdown has begun.
What does this mean for North Dakota?
Two of Burgum’s assertions might be debatable — gasoline prices and job losses — but the last is undeniably true. North Dakota will have much less money without oil.
Again, this is not a consequence of Biden’s orders, however. Neither will have a catastrophic effect on North Dakota oil production. The leasing moratorium affects 14% of well slots “that have the potential to be developed in the future in North Dakota,” Lynn Helms, the state’s mineral resources director told Amy Sisk, a reporter for the Bismarck Tribune.
The loss of the Keystone XL pipeline is of lesser consequence. If it were completed, it might carry some North Dakota crude to refineries in the Gulf Coast states. In fact, closing the project down might have a beneficial impact, since it would remove one source of oil from the U.S. market, opening potential markets for North Dakota crude.
Keystone XL was designed to carry oil from the tar sands of Alberta, which is among the dirtiest of all oil. Bakken crude from North Dakota is significantly less “dirty” than the tar sands oil.
There is a real threat to North Dakota production, though, in the potential closure of the Dakota Access Pipeline. This is an altogether more complicated and more consequential issue than Keystone. DAPL carries about half of North Dakota oil production out of the state. The U.S. Army Corps of Engineers has until Feb. 10 — one week — to tell a federal court how it intends to deal with the pipeline after the court revoked its permit.
Pipelines are far safer than trains, the obvious alternative. The list of explosions involving volatile crude from North Dakota keeps rising. Defenders of pipelines like to concentrate on jobs produced, but these are illusory at best. Jobs peak during construction, then fall off; it doesn’t take many people to operate a pipeline. The only continuing economic impact along most of the route is the taxes local governments are able to extract.
DAPL is a case apart, however, because the route was callously, even ruthlessly, imposed on the Standing Rock Sioux people. The pending Corps decision arises from their objections.
These developments impart an important lesson. Regulation leads to innovation. It’s not the other way around. Important work is underway in North Dakota that could help position the state for the end of the oil age. Carbon sequestration is one of these.
The move away from oil won’t be complete since oil is used to make an array of products aside from fuels. Nor will the move happen quickly. There’s time.
But ignoring the future doesn’t postpone it.
Mike Jacobs is a former editor and publisher of the Grand Forks Herald.