For the survivors of Winter Storm Uri in Texas, it probably won’t be much consolation that it could be worse. At least the state has a $10 billion rainy day fund it can tap into to help with rebuilding.
Texas is not the only state that has amassed these savings — many as a cushion for volatile hydrocarbon markets — but the real shock is yet to come.
Mineral wealth (oil, gas, and coal, but also copper, cobalt, and other naturally occurring materials) has long been something of a poison gift, and not just because of the environmental consequences. With a country like Venezuela, for example, the state owns the mineral rights and profits go straight into government coffers. Too often, those profits feed corruption, with government officials pocketing some of the proceeds or redistributing them to political supporters. The sheer amount of money generated also can suck the air out of the rest of the economy; less lucrative businesses can have a hard time competing with the return on investment and currency inflation that come with mineral wealth. Venezuela is by no means alone in this so-called “resource curse,” but it’s an extreme example as a failing state that’s 99 percent dependent on oil for export earnings.
As of 2020, the United States is the world’s leading producer of oil and gas. The US national economy is big and diverse and a fair amount of mineral rights are privately owned, which keeps the United States from the depths of the “resource curse.” Yet zooming in on the local level shows a different view: Alaska, Wyoming, North Dakota, Texas, Oklahoma, New Mexico, West Virginia, Montana, and Louisiana depend to varying degrees on fossil resources for jobs and state government revenue. The COVID-19 pandemic has made that dependency a bigger problem, given the crash in energy prices and the slack revenue from corporate and sales tax, which many of these states rely on more than or even in lieu of personal income taxes (looking at you, Texas).
President Biden is calling for 100 percent carbon pollution-free electricity by 2035, and net zero emissions by 2050. Right now, 63 percent of US electricity depends on fossil fuels, and overall, 80 percent of US energy consumption is oil, gas, and coal. That significant hurdle is higher for some states than for others. Maine, for example, gets 80 percent of its electricity from renewable energy and produces no coal, oil, or gas. Alaska, on the other hand, depends on fossil fuels for 70 percent of its electricity, 96 percent of its industrial energy consumption, and oil and gas production make up half of the state’s income.
Not only that, climate change disproportionately affects many of these states. Those impacts range from melting permafrost in Alaska to destructive storms along the Gulf Coast and the “dry line,” where continental weather systems converge. Moreover, a number of these states have large Black, Latinx, or Indigenous populations, which are especially vulnerable to climate disasters and impacts, given that high poverty rates and the legacy of discrimination often mean they are in more disaster-prone areas with less means for recovery. The same populations are also far more likely to suffer from the industrial pollution of fossil fuel energy extraction and processing.
That’s a triple whammy of costs for American fossil fuel states, and they will need federal help to make a just energy transition. All but one of these states — New Mexico — went big for Donald Trump in 2020, with Wyoming being the most extreme at 43 points. Joe Biden has said repeatedly that he intends to be president for everyone, but the bigger question is whether these states will accept his help.
This will be a tricky challenge for the new administration, though they are diving right in with a working group to help fossil fuel states. Democrats in the House also introduced the CLEAN Future Act on March 2, which includes provisions to support community and worker transition. The idea may well be to make it hard for the states to say no. A successful energy transition will mean everything from radical energy efficiency to new technologies such as electric vehicles to carbon-free energy, such as nuclear, wind, solar, and hydropower, and that in turn will mean economic development and jobs. The Biden plan also calls for resilient infrastructure, which means investment. Every governor wants more jobs and investment.
Winter Storm Uri offers a tantalizing view of the costs of failure: If Texas had followed recommendations after the last severe winter storm in 2011, how many deaths and what costs would have been avoided in 2021? And while a $10 billion rainy day fund may sound substantial, the estimated costs of this storm are projected to be as high as $200 billion. Texas may not be Venezuela, but the state’s going to need more than a miracle at this point to make it through the energy transition.
Sharon E. Burke is director of the Resource Security Program at New America. She served in the administrations of Barack Obama, George W. Bush, and Bill Clinton, most recently as an assistant secretary of defense.