Originally published at Forbes
Tilak Doshi Contributors
I analyze energy economics and issues related to public policy.
ExxonMobilXOM -1.8% The company’s stock rose to new all time high this week, beating the previous closing record from 2014. Shares of the company have gained 71% since January 1 in a successful year for conventional energy stocks. Last month, Saudi Aramco surpass AppleAAPL -3.9% is the world’s most valuable publicly traded company. This stock result reflects a sharp increase in crude oil prices. Brent crude oil on international exchanges has exceeded $120 per barrel recently. On Monday, Goldman Sachs published a report that revised the oil price outlook higher (again), lifting the summer top price forecast for Brent crude from $125/bbl to $140/bbl. But it’s not just crude oil prices that are likely to continue rising in the long run. Energy prices across the country – from thermal coal and natural gas to diesel and gasoline – have risen over the past year and are highlighted only by financial sanctions imposed on Russia in the wake of the Ukraine invasion.
Countries around the world are grappling with energy shortages and soaring prices as energy security and affordability are pushed to the center of policy after Russian tanks roll into Ukraine. However, it would be a myth to view soaring energy prices as merely the result of Russia’s invasion. The recent spike in fuel prices is the cumulative result of government policies in the West that obsessively focus on speculative, model-based forecasts about the climate impacts of carbon emissions. The climate-industrial complex has vilified fossil fuels over the past few decades in the name of the supposed climate apocalypse. It causes the oil, gas and coal industries to invest and redirect trillions of dollars public funds to subsidize the wind, solar and electric vehicle industries.
What trapped resources?
Mark Carneythe “rock star” former central banker, a member of the Organizing Committee of the World Economic Forum and became the United Nations Special Envoy for Climate Action and Finance in 2019. He was appointed as an advisor. financed the presidency of the United Nations Climate Change Conference COP26 in Glasgow. held in November. Mr. Carney has spent the last few years convincing financial institutions around the world that fossil fuels – which account for more than 80% of the global primary energy supply – are “a costly asset.” stuck” on a one-way trajectory to zero as the world races to “net zero (carbon emissions) by 2050”.
Mr. Carney isn’t the only illustrious expert in the “arid fossil fuel-resources” group. A short list will include the US Secretary of the Treasury Janet YellenBlack stonesBLK -6.4% managing director Larry Fink and Fatih Birol, Executive Director of the International Energy Agency. They assert an “existential threat” of climate change caused by the burning of fossil fuels. These leaders in finance and public policy were joined in the media by climate Cassandras such as Al Gore, Bill McKibben and Prince Charles to encourage divestment of fossil fuel companies. jelly.
A year ago, ExxonMobil made a lot of money media attention because it was forced to give up three board seats to the climate activist investor Engine No. 1 in the industry’s largest and most closely watched corporate competition. Criticisms of the company’s business strategy counter the company’s “lack of attention” to alarming climate concerns. The company no longer supports the “Woke Inc. ” Wall Street hedge funds and were dropped from the Dow Jones in 2020. And now the company is Wall Street’s darling when it comes to cashing in on shareholders. According to analyst Stephen Richardson quoted by a Bloomberg On ExxonMobil’s dramatic change in share price, “every headwind imaginable turns into a whirlwind” due to a “structural deficit” in the crude oil market.
Blue Pain Is “Worth It”
But fossil fuel revenge is barely limited to the value of ExxonMobil’s resurgent stock. It is no small irony that a large swath of the United States – from the Great Lakes to the West Coast, covering about two-thirds of the richest country in the world – is at risk of power outages this summer according to North American Electrical Reliability Corporation (NERC).
As expected, progressive commentator and NERC itself blamed this on forecasts of extreme heat and drought. However, the US has had extreme weather before. After decades of shutting down reliable coal and nuclear power plants (i.e. 24/7 switchable electricity) and replacing them with erratic, time-dependent wind and solar power, In detail, the US national grid is currently unstable and vulnerable to supply and demand spikes. Previous years almost catastrophic power failure in Texas after a sudden cold is illustrated. As one Editor of a major national newspaper put it after a NERC warning: “Summer is coming and we recommend you prepare by purchasing an emergency generator, if you can find one in stock… Welcome to the ‘green energy transition’.”
Europe and the UK, global leaders in the “energy transition”, also face the possibility of blackouts due to active decommissioning of nuclear fuel plants, Coal and gas have been replaced by unreliable renewables over the past two decades. This winter gas shortage could leave six million UK homes without electricity, UK government recent warning. True to the theme of “fossil fuel revenge”, the government has asked the coal power plants it had previously ordered closed to continue operating.
As if rubbing salt into an open wound, Fatih Birol, executive director of the IEA warning Europe may be forced to start allocating energy this winter, especially if the winter is cold and the Chinese economy recovers. This is the same person who announced the incredible Net Zero.”route” – announced by the IEA to much fanfare in May 2021 – which calls for a global halt to all new investments in fossil fuels.
While European sanctions on Russia’s energy exports have exacerbated the energy crisis on the continent, the EU’s rapid and forced transition from fossil fuels to dependence Renewable energy constitutes the underlying backdrop for the dire state of energy security and affordability.
Perhaps the most startling of the self-inflicted energy crises in the West are the surreal claims of sanctuaries and business elites. Speaking on SMEs during the recent Davos summit, Norwegian bank DNB ASA CEO Kjerstin Braathen speak The energy transition will create energy shortages and inflationary pressures, but the “pain” is “worth it.” This is comparable – with its ambiguity about what really matters to ordinary people – to US climate envoy John Kerry expressed he regrets that the war between Ukraine and Russia is “distracting people because of climate change”.
The world needs fossil fuels
In the constant and frequent coverage of the mainstream media about renewable energy technologies, especially wind and solar energy, the big picture of global energy issues is blurred. left open. One estimates 3.5 billion people – the poor of the developing world, mainly in sub-Saharan Africa and South Asia – lack access to an adequate and reasonably reliable electricity supply. During the 5-year period to 2019 (before the pandemic broke out), developing countries accounting for nearly 90% of global demand growth for primary energy; Asian developing countries claim nearly three-quarters of the country’s sovereignty. As the developing world, especially Asia’s rapidly growing populous economies, emerge from the grip of the pandemic, access to affordable fossil fuels will be critical to with their development prospects over the next few decades.
From this perspective, it is encouraging that “global asset managers are still pouring tens of billions of dollars into new coal projects and hundreds of billions of dollars into major oil and gas companies.” according to some recent newspapers report are from Get financial back. The organization tracks financial sector investments in fossil fuels. In a statement published alongside the report, Reclaim Finance’s Lara Cuvelier was clearly frustrated questioning “Is the wealth management industry changing its investment practices in line with climate science, reducing investment invest in coal, oil or gas expansion? Unfortunately, the answer is “no”. For Miss Cuvelier, obviously, “climate science” is settled. Meanwhile, green stocks have become failure 2021, lagging even the airlines.
Vaclav Smil points out in his recent book Judges – “How the world really works”- coal, oil and gas have fueled urbanization, industrialization and agricultural productivity; Moving up the conventional energy ladder has led to an improvement in the standard of living of the vast majority of the global population, including today’s developed countries. Like the rational optimist Matt Ridley stated a few years ago, “fossil fuels will save the world, really.”
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