Contributors Energy
I analyze energy economics and issues related to public policy.
A brief survey of recent media headlines reveals a profound change for analysts and commentators on issues in the energy sector. The baseline over the past three or four decades has been an endless stream of articles that defame, disparage, and demean the fossil fuel industry as the cause of “destroying the planet.” a la Greta Thunberg. After Russia invaded Ukraine, we seem to be at a crossroads of global importance:
Reuters (February 28): Nuclear, coal, LNG: ‘There is nothing taboo’ in the German energy sector
Reuters (March 13): German Finance Minister is open to new oil and gas drilling in the North Sea
The Times (UK, March 14): Plan to keep coal power plants open
show EXPR + 0.8% (UK, March 20): Boris Johnson hints at quick return as he vows to ‘take back control’ of energy
CNBC (US, March 9): US Energy Secretary Granholm urges oil and gas companies to increase production
How has the world of energy changed?
Mine, how the world has changed! The flood of calls to end fossil fuels and “switch” to “renewable fuels” like solar, wind and battery (but not nuclear) have flooded the headlines across the media. media for years, leading advocates of the “Green Deal” in Western Europe (and the Green New Deal in the United States) and “Net Zero by 2050” are now calling for coal and nuclear plants resume operations, restore oil and gas drilling in the North Sea, allow mining in the UK, and urge US oil companies to “produce more”. US Secretary of Energy Jennifer Granholm told a collection of oil and gas companies at a recent conference in Houston, Texas
We are in a state of war — an emergency — and we must step up in the short term responsibly. [oil and gas] providing where we can right now to stabilize the market and minimize the damage to American families…. And that means you produce more now, where and if you can… .So right now, we need increased oil and gas production to meet current demand…
This is from a key member of the governing body that upon taking office immediately declare a regulatory war against US oil and gas producers. From closing or blocking new oil and gas pipelines, to stopping oil and gas drilling on federal lands, Alaska and the Gulf of Mexico, to pushing banks to stop funding investments. invest in oil and gas, the Biden administration has done “fighting climate change”. central goal. When this resulted in the polls for President Biden dropping to Gasoline prices at the pump rise to multi-year highsThe Biden administration used beg OPEC + of oil producers to increase their output. This skewed state of oil diplomacy deepened when the administration look to Venezuela and Iran as a potential source of oil.
For energy analysts not sold on modeled predictions of the “climate emergency” and Magical thinking about unreliable renewable energyThe expectation before the Ukraine conflict was a slow war of attrition between the two forces. On one side is the rogue of climate-industrial complex decades in production, combining a range of interests and elite institutions in the West. These range from environmental NGOs spreading climate alarmism, renewable energy lobbyists pursuing favorable government mandates and subsidies, and international organizations such as International Energy Agency and the United Nations Intergovernmental Panel on Climate Change spend more time advocating for a radical global energy agenda than critically analyzing trade-offs and establishing objective policy choices for human well-being.
On the other side of the war of attrition is survey – large masses of working poor and aspiring middle classes who are incapable of signaling virtue – increasingly affected by escalating energy prices and higher costs of living. This is becoming increasingly apparent in countries like Germany and UK take the lead in moving to “zero” emissions by 2050. Impact of high electricity prices and unsustainable heating and transportation costs on poorer households in Europe becomes more and more obvious this winter energy crisis Dependence on Russian energy imports, high oil and natural gas prices, and prolonged periods of little or no wind have sharply reduced the supply of renewable energy.
A Semblance of Energy Realism
The invasion of Ukraine changed all of that. At a stroke, a refreshment energy realism discovered European political elites, especially the German Greens, a major component of the coalition government. Economy Minister Robert Halbeck speak that there is “nothing taboo to consider” and is looking at options to expand the country’s coal and nuclear power plants operations and import liquefied natural gas (LNG). Halbeck is a member of the Green party, whose climate cleanliness is a central tenet of the party’s political faith. Repeating the “no taboo” rule, even Frans Timmermans – EU Green Deal head and leading proponent of German overpriced Energiewende policies that force the transition to a “low-carbon future” – speak Countries that plan to burn coal as an alternative to Russian gas can do so in line with EU climate goals. Similarly in the UK, Prime Minister Boris Johnson has “made clear that he is giving Britain the green light to use its gas and oil resources in the future with insiders hinting that a U-turn to permit cracking is forthcoming”.
By making energy security central to the policy agenda, the Ukraine war has brought some hallmarks of energy realism back into the mainstream. However, the story of the “climate emergency” is far from being dethroned in the policy elite. Speaking to the audience via video link on Monday, UN Secretary General António Guterres highlights how Russia’s invasion of Ukraine threatens to become a major obstacle to a concerted effort to accelerate climate action. “Countries can become so consumed by an immediate shortage of fossil fuel supplies that they ignore or ignore policies that cut fossil fuel use,” Guterres said. “This is madness.”
While many may disagree about the residence of this “madness,” Mr. Guterres reflects the same kind of tone deafness that John Kerry, President Biden’s climate envoy, does. lament that the invasion of Ukraine has distracted people, including Russian President Putin, from “the fight against climate change”. In another interview he said the fight was “very tough for the climate program, no question about it.” These comments show that policy elites are not just ideologically drawn from the everyday practical problems of ordinary people. They are also oblivious to the fact that it is anti-fossil fuel policies in Europe and the United States that have given Russia a limited position in terms of energy supplies to Europe.
Western oil and gas companies attacked
Oil and gas companies in the West have been despised and vilified for decades with social stigma and strict ESG regulations now under attack for not ramping up production quickly and quickly enough ! With only a slight slur, author and energy journalist Terry Etam describes the message Western political leaders send to the industry. as follows:
The hydrocarbon industry, just shut down and ramp up production, we know it’s easy and you just choose not to do it. We don’t want to hear from you, you have no future and you are obsolete dinosaurs still ravaging the planet. But due to unforeseen war, we only need to employ you for a few more years, and if you don’t ramp up production immediately, that means you’re not supporting the Ukrainian people.
While international oil and gas companies such as BP and Shell are busy deconstructing their business models in favor of renewable technologies and the “energy transition” to satisfy their stakeholders. their activities, Saudi Aramco has doubled its net income in 2021 to $110 billion, allowing it to issue bonus shares. With profits expected to be even higher in 2022, the national oil company is planning to boost its upstream capital spending by $40 – $50 billion to further expand its production capacity and strengthen its role as a global swing supplier. In his view, the world, especially the developing countries that account for 80% of the global population, will need their oil for decades to come.
The Russo-Ukrainian War has caused much bloodshed, destruction and tragedy for millions of displaced people. It also made the green chicken go home to crow.
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