The U.S. is barreling toward one of the greatest self-inflicted wounds in its history. This came into sharper focus last week when President Biden suspended oil leases in Alaska’s Arctic National Wildlife Refuge (ANWR), even as Russia and the Organization of the Petroleum Exporting Countries (OPEC) announced production increases.
Mr. Biden’s anti-carbon fusillade will have no
effect on the climate as global demand for fossil fuels will continue to increase
for decades no matter what the U.S. does. Meantime, Russia, China and Iran will
take advantage of America’s astonishing fossil-fuel retreat.
***
Not long ago, the U.S.
depended on OPEC for much of its oil supply. But hydraulic fracturing and horizontal
drilling enabled producers to extract oil and natural gas once believed
unrecoverable. Shale frackers from North Dakota to Texas unleashed a surge of
oil and gas onto global markets, breaking OPEC’s dominance on supply. OPEC
tried to break U.S. producers by flooding markets, but frackers became more
efficient. By 2019 the U.S. was producing nearly two-and-a-half times as much
crude as in 2008. OPEC and Russia have had to limit their production to lift
prices to shore up budgets that depend on petrodollars
U.S. producers reduced investment during the pandemic as demand
plunged. While prices have since recovered to a two-year high, a larger U.S.
retrenchment driven by government and progressive investors is on the way.
Two weeks ago the hedge fund Engine
No. 1 allied with big asset managers, government pension funds and proxy
advisers ousted three Exxon Mobil board members in a climate proxy battle. Shareholders
also passed a resolution requiring Chevron to reduce its downstream emissions. The latter
is a de facto mandate to withdraw from oil and gas.
America’s big banks have red-lined U.S. coal companies and refused to finance
oil projects in ANWR, which the 2017 GOP tax reform opened up to development.
Now the Biden Administration is trying to wall off the Arctic again as it
launches a regulatory assault on fossil fuels—from tighter emission rules to
endangered-species protections.
The anti-carbon left
says the U.S. must banish fossil fuels to meet the Paris goal of limiting
global warming to 1.5 degrees Celsius relative to pre-industrial temperatures.
This is incompatible with a worldwide population that is expected to grow by
two billion by 2050. It would require an enormous reorganization of the global
economy that would keep billions in poverty.
Electric vehicles would
have to make up 60% of worldwide car sales by 2030, according to a recent
International Energy Agency report. “You have 800 million people who do not
have access to electricity. You can’t say that they have to go to net zero
[carbon]. They have to develop,” Indian Minister of New and Renewable Energy
Raj Kumar Singh said in March.
***
Unless there is some
technology breakthrough, demand for fossil fuels will continue to grow for
decades. And Russia and China will take advantage of U.S. energy disarmament.
Russian oil giant Rosneft warned last fall that retrenchment by U.S. and European
companies would result in higher prices and shortages. “Someone will need to
step in,” Rosneft senior executive Didier Casimiro said.
In November Rosneft
announced a $170 billion oil and gas project in Russia’s north, which it claims
can supply the entire world’s oil demand for a year. It says the project will
become the world’s largest liquefied natural gas producer by 2030. Russia is
also laying down thousands of miles of oil and gas pipelines to supply Europe
and Asia.
Vladimir Putin is gloating that Russia’s Nord Stream 2
gas pipeline to Germany will soon be finished, as Mr. Biden has refused to
sanction Russian companies running the project. But he didn’t care about
upsetting Canada when he killed the Keystone XL pipeline. Nor Alaskans when he
suspended the ANWR leases. Mr. Biden wants to curtail North American energy
development while he stands by as Russia uses its natural resources for
strategic gain.
That includes coal, by
the way. Russia is spending more than $10 billion on railroad upgrades to boost
its coal exports. According to a new report by the Global Energy Monitor, coal
producers—in Australia, China, India, Russia and South Africa—are planning
mining projects that would increase global output by 30%. China has 112 coal
mines under construction. It is also developing shale.
Progressives want to
surrender one of America’s major strategic economic advantages in the name of
saving the climate. But banishing fossil fuels in the U.S. won’t eliminate
carbon emissions, which will be produced somewhere else. So will the jobs,
economic growth and geopolitical leverage.
No comments:
Post a Comment