Energy Inflation Playbook

Rupert Darwall explains the intentional inflation of energy prices world wide in his forward to a Real Energy study by Joseph Toomey Energy Inflation Was by Design.  The title is a link to the pdf.  Darwall’s introduction was published at the Federalist entitled Energy Inflation Isn’t An Accident, It’s A Planned Demolition.  Excerpts in italics with my bolds and added images.

Our current energy crisis was self-inflicted, a foreseeable outcome
of policy choices made by the West, and it’s getting worse
.

The West is experiencing its third energy crisis. The first, in 1973, was caused by the near-quintupling of the price of crude oil by Gulf oil producers in response to America’s support for Israel in the Yom Kippur war. Their action brought an end to what the French call the trente glorieuses — the unprecedented post–World War II economic expansion.

The second occurred at the end of the 1970s, when Iran’s Islamic revolution led to a more than doubling of oil prices. This again inflicted great economic hardship, but the policy response was far better. Inflation was purged at the cost of deep recession. Energy markets were permitted to function. High oil prices induced substitution effects, particularly in the power sector, and stimulated increased supply.

In the space of nine months, the oil price cratered from $30 a barrel in November 1985 to $10 a barrel in July 1986. It’s no wonder that the economic expansion that started under Ronald Reagan had such long legs.

This time is different. The third energy crisis was not sparked by Saudi Arabia and its Gulf allies or by Iranian ayatollahs. It was self-inflicted, a foreseeable outcome of policy choices made by the West: Germany’s disastrous Energiewende that empowered Vladimir Putin to launch an energy war against Europe; Britain’s self-regarding and self-destructive policy of “powering past coal” and its decision to ban fracking; and, as Joseph Toomey shows in a recent powerful essay, President Biden’s war on the American oil and gas industry.

Hostilities were declared during Joe Biden’s campaign for the Democratic presidential nomination. “I guarantee you. We’re going to end fossil fuel,” candidate Biden told a climate activist in September 2019, words that the White House surely hopes get lost down a memory hole. Toomey’s paper has all the receipts, so there’s no danger of that.

As he observes, Biden’s position in 2022 resembles Barack Obama’s in 2012, when rising gas prices threatened to sink his reelection. Obama responded with a ruthlessness that his erstwhile running mate lacks. He simply stopped talking about climate and switched to an all-of-the-above energy policy, shamelessly claiming credit for the fracking revolution that his own Environmental Protection Agency (EPA) tried to strangle at birth.

Passage of the comically mistitled Inflation Reduction Act places this option beyond Biden’s reach, even if he were so inclined. Democrats are hardly going to take a vow of climate omertà when they’ve achieved a political triumph of pushing through Congress what they regard as the most significant climate legislation to date.

Although the price of oil has slipped back from recent highs, the factors behind high gasoline prices remain in place. Foremost among these is the steep decline in U.S. oil refinery capacity triggered when Covid lockdowns crushed demand but continued after the economy reopened. There has never been such a large fall in operable refinery capacity. Moreover, Gulf Coast refineries were operating at 97 percent of their operating capacity in June 2022. As Toomey remarks, “There isn’t any more blood to be squeezed out of this turnip.”

Toomey identifies five factors driving this decline in refinery capacity.

EPA biofuel blending mandates impose crippling costs on smaller refineries. 

When conventional refineries are converted to processing biofuels, up to 90 percent of their capacity is lost. Biofuel mandates cost consumers far more than federal excise taxes. Toomey demonstrates that the Biden administration’s claim that biofuel mandates protect consumers from oil-price volatility is totally false; biofuel prices, he writes, “are essentially indexed to the price of crude oil.”

Biden could order the reversal of the EPA’s retroactive biofuel threshold rules. That he has not done so demonstrates that the administration isn’t serious about making energy affordable again. High prices for fossil fuel energy are an intended part of the plan.

Corporate and Wall Street ESG policies are another factor driving refinery closures.

Especially facilities owned by European oil companies have to meet punishing decarbonization targets that will effectively end up sunsetting them as oil companies. If finalized as proposed, the Securities and Exchange Commission’s proposed climate disclosure rules, with the strong support of the Biden administration, will heighten the vulnerability of U.S. oil and gas companies to climate activists and woke investors to force them to progressively divest their carbon-intensive activities, such as refining crude oil, and eventually out of the oil and gas sector altogether.

Aggressive federal policies aimed at phasing out gasoline-powered vehicles.

To these should be added aggressive federal policies aimed at phasing out gasoline-powered vehicles in favor of electric vehicles (EVs); an administration staffed from top to bottom by militants who believe that climate is the only thing that matters in politics; and an increasingly hostile political climate (“You know the deal,” Biden said of oil executives when campaigning for the presidency. “When they don’t deliver, put them in jail”).

These policies, argues Toomey, will see China become the world’s leading oil refiner for years to come. Will Biden find himself asking China for supplies of refined gasoline? He might well find himself being saved from such an unfortunate position, made more so by Speaker Nancy Pelosi’s recent trip to Taiwan, by help from the other side of the southern border.

Mexico is constructing a $12 billion refinery, due to start producing gasoline next year. Perhaps President Biden’s next foreign trip should be to Mexico City.

 

 

Biden Feds Kneecapped Oil and Gas

Report from Just the News After Trump energy ‘renaissance,’ Biden ‘kneecapped’ oil and gas producers: industry spokesman.  Excerpts in italics with my bolds and added images

The president of the U.S. Oil and Gas Association contrasted “the greatest energy renaissance in our history” under Trump with “regulatory assault and the attempt to defund us and to debank us on Wall Street” by the Biden administration.

The U.S. oil and gas industry quickly went from a “renaissance” under former President Donald Trump to a new dark age under a Biden administration hostile to traditional energy sources, the head of the industry’s trade association said Friday.

“President Trump, to his credit, presided over the greatest energy renaissance in our history,” Tim Stewart, president of the Oil and Gas Association, said on the the “Just the News, No Noise” TV show. “Right before the pandemic, we were producing 13 million barrels [of oil] a day. For all intents and purposes … we were a net exporter of energy.”

Amid buoyant expectations of increasing U.S. production to 15 million barrels per day, the industry was suddenly rocked by consecutive shocks: the pandemic, followed by the Biden administration war on fossil fuels.

“We came out of COVID right into the Biden administration, which then kneecapped us,” Stewart recounted. “Between their regulatory assault and the attempt to defund us and to debank us on Wall Street, we’re still a million or million and a half barrels behind where we were. And we’re 3 million barrels behind where we could be. And that’s really unfortunate. And that’s unfortunate for our European allies in particular.”

Now, even some Democrats are recognizing the administration has taken its crusade against oil and gas too far, too fast, says Stewart.

“I’ve had some interesting conversations with members of Congress just in the last two weeks, of both the Senate and the House and Republicans and Democrats,” he said. “And there are Democrats who are starting to say, ‘Maybe we went a little too far.’ It’s a year too late. But we welcome that.”

Stewart was asked if the Oil and Gas Association would ever get a call seeking advice from the Biden administration.  “I don’t know if we ever will hear from them to be honest with you,” Stewart answered.

“The number of people who are political appointees in the administration who came out of our industry or who really understand it, you can literally count on one hand.”

See also Wake Up and Smell the Fossil Fuel Insanity

 

 

By the Numbers: CO2 Mostly Natural

This post compiles several independent proofs which refute those reasserting the “consensus” view attributing all additional atmospheric CO2 to humans burning fossil fuels.

The IPCC doctrine which has long been promoted goes as follows. We have a number over here for monthly fossil fuel CO2 emissions, and a number over there for monthly atmospheric CO2. We don’t have good numbers for the rest of it-oceans, soils, biosphere–though rough estimates are orders of magnitude higher, dwarfing human CO2. So we ignore nature and assume it is always a sink, explaining the difference between the two numbers we do have. Easy peasy, science settled.

The non-IPCC paradigm is that atmospheric CO2 levels are a function of two very different fluxes. FF CO2 changes rapidly and increases steadily, while Natural CO2 changes slowly over time, and fluctuates up and down from temperature changes. The implications are that human CO2 is a simple addition, while natural CO2 comes from the integral of previous fluctuations.

1.  History of Atmospheric CO2 Mostly Natural

This proof is based on the 2021 paper World Atmospheric CO2, Its 14C Specific Activity, Non-fossil Component, Anthropogenic Fossil Component, and Emissions (1750–2018) by Kenneth Skrable, George Chabot, and Clayton French at University of Massachusetts Lowell.

The analysis employs ratios of carbon isotopes to calculate the relative proportions of atmospheric CO2 from natural sources and from fossil fuel emissions. 

The specific activity of 14C in the atmosphere gets reduced by a dilution effect when fossil CO2, which is devoid of 14C, enters the atmosphere. We have used the results of this effect to quantify the two components: the anthropogenic fossil component and the non-fossil component.  All results covering the period from 1750 through 2018 are listed in a table and plotted in figures.

These results negate claims that the increase in total atmospheric CO2 concentration C(t) since 1800 has been dominated by the increase of the anthropogenic fossil component. We determined that in 2018, atmospheric anthropogenic fossil COrepresented 23% of the total emissions since 1750 with the remaining 77% in the exchange reservoirs. Our results show that the percentage of the total CO2 due to the use of fossil fuels from 1750 to 2018 increased from 0% in 1750 to 12% in 2018, much too low to be the cause of global warming.

The graph above is produced from Skrable et al. dataset Table 2. World atmospheric CO2, its C‐14 specific activity, anthropogenic‐fossil component, non fossil component, and emissions (1750 ‐ 2018).  The purple line shows reported annual concentrations of atmospheric CO2 from Energy Information Administration (EIA)  The starting value in 1750 is 276 ppm and the final value in this study is 406 ppm in 2018, a gain of 130 ppm.

The red line is based on EIA estimates of human fossil fuel CO2 emissions starting from zero in 1750 and the sum slowly accumulating over the first 200 years.  The estimate of annual CO2 emitted from FF increases from 0.75 ppm in 1950 up to 4.69 ppm in 2018. The sum of all these annual emissions rises from 29.3 ppm in 1950 (from the previous 200 years) up to 204.9 ppm (from 268 years).  These are estimates of historical FF CO2 emitted into the atmosphere, not the amount of FF CO2 found in the air.

Atmospheric CO2 is constantly in two-way fluxes between multiple natural sinks/sources, principally the ocean, soil and biosphere. The annual dilution of carbon 14 proportion is used to calculate the fractions of atmospheric FF CO2 and Natural CO2 remaining in a given year. The blue line shows the FF CO2 fraction rising from 4.03 ppm in 1950 to 46.84 ppm in 2018.  The cyan line shows Natural CO2 fraction rising from 307.51 in 1950 to 358.56 in 2018.

The details of these calculations from observations are presented in the two links above, and the logic of the analysis is summarized in my previous post On CO2 Sources and Isotopes.  The table below illustrates the factors applied in the analysis.

C(t) is total atm CO2, S(t) is Seuss 14C effect, CF(t) is FF atm CO2, CNF(t) is atm non-FF CO2, DE(t) is FF CO2 emissions

Summary

Despite an estimated 205 ppm of FF CO2 emitted since 1750, only 46.84 ppm (23%) of FF CO2 remains, while the other 77% is distributed into natural sinks/sources. As of 2018 atmospheric CO2 was 405, of which 12% (47 ppm) originated from FF.   And the other 88% (358 ppm) came from natural sources: 276 prior to 1750, and 82 ppm since.  Natural CO2 sources/sinks continue to drive rising atmospheric CO2, presently at a rate of 2 to 1 over FF CO2.

2.  Analysis of CO2 Flows Confirms Natural Dominance

Independent research by Dr. Ed Berry focused on studying flows and level of CO2 sources and sinks.  The above summary chart from his published work presents a very similar result.

The graph above summarizes Dr. Berry’s findings. The lines represent CO2 added into the atmosphere since the 1750 level of 280 ppm. Based on IPCC data regarding CO2 natural sources and sinks, the black dots show the CO2 data. The small blue dots show the sum of all human CO2 emissions since they became measurable, irrespective of transfers of that CO2 from the atmosphere to land or to ocean.

Notice the CO2 data is greater than the sum of all human CO2 until 1960. That means nature caused the CO2 level to increase prior to 1960, with no reason to stop adding CO2 since. In fact, the analysis shows that in the year 2020, the human contribution to atmospheric CO2 level is 33 ppm, which means that from a 2020 total of 413 ppm, 280 is pre-industrial and 100 is added from land and ocean during the industrial era.

My synopsis of his work is IPCC Data: Rising CO2 is 75% Natural

A new carbon cycle model shows human emissions cause 25% and nature 75% of the CO2 increase is the title (and link) for Dr. Edwin Berry’s paper accepted in the journal Atmosphere August 12, 2021.

3. Nature Erases Pulses of Human CO2 Emissions  

Those committed to blaming humans for rising atmospheric CO2 sometimes admit that emitted CO2 (from any source) only stays in the air about 5 years (20% removed each year)  being absorbed into natural sinks.  But they then save their belief by theorizing that human emissions are “pulses” of additional CO2 which persist even when particular molecules are removed, resulting in higher CO2 concentrations.  The analogy would be a traffic jam on the freeway which persists long after the blockage is removed.

A recent study by Bud Bromley puts the fork in this theory.  His paper is A conservative calculation of specific impulse for CO2.  The title links to his text which goes through the math in detail.  Excerpts are in italics here with my bolds.

In the 2 years following the June 15, 1991 eruption of the Pinatubo volcano, the natural environment removed more CO2 than the entire increase in CO2 concentration due to all sources, human and natural, during the entire measured daily record of the Global Monitoring Laboratory of NOAA/Scripps Oceanographic Institute (MLO) May 17, 1974 to June 15, 1991. Then, in the 2 years after that, that CO2 was replaced plus an additional increment of CO2.

The data and graphs produced by MLO also show a reduction in slope of total CO2 concentration following the June 1991 eruption of Pinatubo, and also show the more rapid recovery of total CO2 concentration that began about 2 years after the 1991 eruption. This graph is the annual rate of change (i.e., velocity or slope) of total atmosphere CO2 concentration. This graph is not human CO2.

More recently is his study Scaling the size of the CO2 error in Friedlingstein et al.  Excerpts in italics with my bolds.

Since net human emissions would be a cumulative net of two fluxes, if there were a method to measure it, and since net global average CO2 concentration (i.e., NOAA Mauna Loa) is the net of two fluxes, then we should compare these data as integral areas. That is still an apples and oranges comparison because we only have the estimate of human emissions, not net human emissions. But at least the comparison would be in the right order of magnitude.

That comparison would look something like the above graphic. We would be comparing the entire area of the orange quadrangle to the entire blue area, understanding that the tiny blue area shown is much larger than actually is because the amount shown is human emissions only, not net human emissions. Human CO2 absorptions have not been subtracted. Nevertheless, it should be obvious that (1) B is not causing A, and (2) the orange area is enormously larger than the blue area.

Human emissions cannot be driving the growth rate (slope) observed in net global average CO2 concentration.

4.  Setting realistic proportions for the carbon cycle.

Hermann Harde applies a comparable perspective to consider the carbon cycle dynamics. His paper is Scrutinizing the carbon cycle and CO2 residence time in the atmosphere. Excerpts with my bolds.

Different to the IPCC we start with a rate equation for the emission and absorption processes, where the uptake is not assumed to be saturated but scales proportional with the actual CO2 concentration in the atmosphere (see also Essenhigh, 2009; Salby, 2016). This is justified by the observation of an exponential decay of 14C. A fractional saturation, as assumed by the IPCC, can directly be expressed by a larger residence time of CO2 in the atmosphere and makes a distinction between a turnover time and adjustment time needless.

Based on this approach and as solution of the rate equation we derive a concentration at steady state, which is only determined by the product of the total emission rate and the residence time. Under present conditions the natural emissions contribute 373 ppm and anthropogenic emissions 17 ppm to the total concentration of 390 ppm (2012). For the average residence time we only find 4 years.

The stronger increase of the concentration over the Industrial Era up to present times can be explained by introducing a temperature dependent natural emission rate as well as a temperature affected residence time. With this approach not only the exponential increase with the onset of the Industrial Era but also the concentrations at glacial and cooler interglacial times can well be reproduced in full agreement with all observations.

So, different to the IPCC’s interpretation the steep increase of the concentration since 1850 finds its natural explanation in the self accelerating processes on the one hand by stronger degassing of the oceans as well as a faster plant growth and decomposition, on the other hand by an increasing residence time at reduced solubility of CO2 in oceans. Together this results in a dominating temperature controlled natural gain, which contributes about 85% to the 110 ppm CO2 increase over the Industrial Era, whereas the actual anthropogenic emissions of 4.3% only donate 15%. These results indicate that almost all of the observed change of CO2 during the Industrial Era followed, not from anthropogenic emission, but from changes of natural emission. The results are consistent with the observed lag of CO2 changes behind temperature changes (Humlum et al., 2013; Salby, 2013), a signature of cause and effect. Our analysis of the carbon cycle, which exclusively uses data for the CO2 concentrations and fluxes as published in AR5, shows that also a completely different interpretation of these data is possible, this in complete conformity with all observations and natural causalities.

5.  More CO2 Is Not a Problem But a Blessing

William Happer provides a framework for thinking about climate, based on his expertise regarding atmospheric radiation (the “greenhouse” mechanism).  But he uses plain language accessible to all.  The Independent Institute published the transcript for those like myself who prefer reading for full comprehension.  Source: How to Think about Climate Change  

His presentation boils down to two main points:  More CO2 will result in very little additional global warming. But it will increase productivity of the biosphere.  My synopsis is: Climate Change and CO2 Not a Problem  Brief excerpts in italics with my bolds.

This is an important slide. There is a lot of history here and so there are two historical pictures. The top picture is Max Planck, the great German physicist who discovered quantum mechanics. Amazingly, quantum mechanics got its start from greenhouse gas-physics and thermal radiation, just what we are talking about today. Most climate fanatics do not understand the basic physics. But Planck understood it very well and he was the first to show why the spectrum of radiation from warm bodies has the shape shown on this picture, to the left of Planck. Below is a smooth blue curve. The horizontal scale, left to right is the “spatial frequency” (wave peaks per cm) of thermal radiation. The vertical scale is the thermal power that is going out to space. If there were no greenhouse gases, the radiation going to space would be the area under the blue Planck curve. This would be the thermal radiation that balances the heating of Earth by sunlight.

In fact, you never observe the Planck curve if you look down from a satellite. We have lots of satellite measurements now. What you see is something that looks a lot like the black curve, with lots of jags and wiggles in it. That curve was first calculated by Karl Schwarzschild, who first figured out how the real Earth, including the greenhouse gases in its atmosphere, radiates to space. That is described by the jagged black line. The important point here is the red line. This is what Earth would radiate to space if you were to double the CO2 concentration from today’s value. Right in the middle of these curves, you can see a gap in spectrum. The gap is caused by CO2 absorbing radiation that would otherwise cool the Earth. If you double the amount of CO2, you don’t double the size of that gap. You just go from the black curve to the red curve, and you can barely see the difference. The gap hardly changes.

The message I want you to understand, which practically no one really understands, is that doubling CO2 makes almost no difference.

The alleged harm from CO2 is from warming, and the warming observed is much, much less than predictions. In fact, warming as small as we are observing is almost certainly beneficial. It gives slightly longer growing seasons. You can ripen crops a little bit further north than you could before. So, there is completely good news in terms of the temperature directly. But there is even better news. By standards of geological history, plants have been living in a CO2 famine during our current geological period.

So, the takeaway message is that policies that slow CO2 emissions are based on flawed computer models which exaggerate warming by factors of two or three, probably more. That is message number one. So, why do we give up our freedoms, why do we give up our automobiles, why do we give up a beefsteak because of this model that does not work?

Takeaway message number two is that if you really look into it, more CO2 actually benefits the world. So, why are we demonizing this beneficial molecule that is making plants grow better, that is giving us slightly less harsh winters, a slightly longer growing season? Why is that a pollutant? It is not a pollutant at all, and we should have the courage to do nothing about CO2 emissions. Nothing needs to be done.

Footnote:  The Core of the CO2 Issue Update July 15

An adversarial comment below goes to the heart of the issue:

“The increase of the CO2 level since 1850   are more than accounted for by manmade emissions.
Nature remains a net CO2 sink, not a net emitter.”

The data show otherwise.  Warming temperatures favor natural sources/sinks emitting more CO2 into the atmosphere, while previously captured CO2 shifts over time into long term storage as bicarbonates.  In fact, rising temperatures are predictive of rising CO2, as shown mathematically.

Temps Cause CO2 Changes, Not the Reverse. June 2022 Update

It is the ongoing natural contribution to atmospheric CO2 that is being denied.

 

 

2022 Update: Fossil Fuels ≠ Global Warming

gas in hands

Previous posts addressed the claim that fossil fuels are driving global warming. This post updates that analysis with the latest (2021) numbers from BP Statistics and compares World Fossil Fuel Consumption (WFFC) with three estimates of Global Mean Temperature (GMT). More on both these variables below.

WFFC

2021 statistics are now available from BP for international consumption of Primary Energy sources. 2022 Statistical Review of World Energy. 

The reporting categories are:
Oil
Natural Gas
Coal
Nuclear
Hydro
Renewables (other than hydro)

Note:  British Petroleum (BP) now uses Exajoules to replace MToe (Million Tonnes of oil equivalents.) It is logical to use an energy metric which is independent of the fuel source. OTOH renewable advocates have no doubt pressured BP to stop using oil as the baseline since their dream is a world without fossil fuel energy.

From BP conversion table 1 exajoule (EJ) = 1 quintillion joules (1 x 10^18). Oil products vary from 41.6 to 49.4 tonnes per gigajoule (10^9 joules).  Comparing this annual report with previous years shows that global Primary Energy (PE) in MToe is roughly 24 times the same amount in Exajoules.  The conversion factor at the macro level varies from year to year depending on the fuel mix. The graphs below use the new metric.

This analysis combines the first three, Oil, Gas, and Coal for total fossil fuel consumption world wide (WFFC).  The chart below shows the patterns for WFFC compared to world consumption of Primary Energy from 1965 through 2021.

The graph shows that global Primary Energy (PE) consumption from all sources has grown continuously over 5 decades. Since 1965  oil, gas and coal (FF, sometimes termed “Thermal”) averaged 88% of PE consumed, ranging from 93% in 1965 to 82% in 2021.  Note that in 2020, PE dropped 23 EJ (4%) below 2019 consumption, then increased 31 EJ in 2021.  WFFC for 2020 dropped 26 EJ (5%), then in 2021 gained back 26% to match 2019 WFFC consumption. For the 56 year period, the net changes were:

Oil 184%
Gas 540%
Coal 176%
WFFC 236%
PE 282%
Global Mean Temperatures

Everyone acknowledges that GMT is a fiction since temperature is an intrinsic property of objects, and varies dramatically over time and over the surface of the earth. No place on earth determines “average” temperature for the globe. Yet for the purpose of detecting change in temperature, major climate data sets estimate GMT and report anomalies from it.

UAH record consists of satellite era global temperature estimates for the lower troposphere, a layer of air from 0 to 4km above the surface. HadSST estimates sea surface temperatures from oceans covering 71% of the planet. HADCRUT combines HadSST estimates with records from land stations whose elevations range up to 6km above sea level.

Both GISS LOTI (land and ocean) and HADCRUT4 (land and ocean) use 14.0 Celsius as the climate normal, so I will add that number back into the anomalies. This is done not claiming any validity other than to achieve a reasonable measure of magnitude regarding the observed fluctuations.

No doubt global sea surface temperatures are typically higher than 14C, more like 17 or 18C, and of course warmer in the tropics and colder at higher latitudes. Likewise, the lapse rate in the atmosphere means that air temperatures both from satellites and elevated land stations will range colder than 14C. Still, that climate normal is a generally accepted indicator of GMT.

Correlations of GMT and WFFC

The next graph compares WFFC to GMT estimates over the five decades from 1965 to 2021 from HADCRUT4, which includes HadSST4.

Since 1965 the increase in fossil fuel consumption is dramatic and monotonic, steadily increasing by 236% from 146 to 490 exajoules.  Meanwhile the GMT record from Hadcrut shows multiple ups and downs with an accumulated rise of 0.8C over 56 years, 6% of the starting value.

The graph below compares WFFC to GMT estimates from UAH6, and HadSST4 for the satellite era from 1980 to 2021, a period of 41 years.

In the satellite era WFFC has increased at a compounded rate of nearly 2% per year, for a total increase of 90% since 1979. At the same time, SST warming amounted to 0.49C, or 3.4% of the starting value.  UAH warming was 0.48C, or 3.5% up from 1979.  The temperature compounded rate of change is 0.1% per year, an order of magnitude less than WFFC.  Even more obvious is the 1998 El Nino peak and flat GMT since.

Summary

The climate alarmist/activist claim is straight forward: Burning fossil fuels makes measured temperatures warmer. The Paris Accord further asserts that by reducing human use of fossil fuels, further warming can be prevented.  Those claims do not bear up under scrutiny.

It is enough for simple minds to see that two time series are both rising and to think that one must be causing the other. But both scientific and legal methods assert causation only when the two variables are both strongly and consistently aligned. The above shows a weak and inconsistent linkage between WFFC and GMT.

Going further back in history shows even weaker correlation between fossil fuels consumption and global temperature estimates:

wfc-vs-sat

Figure 5.1. Comparative dynamics of the World Fuel Consumption (WFC) and Global Surface Air Temperature Anomaly (ΔT), 1861-2000. The thin dashed line represents annual ΔT, the bold line—its 13-year smoothing, and the line constructed from rectangles—WFC (in millions of tons of nominal fuel) (Klyashtorin and Lyubushin, 2003). Source: Frolov et al. 2009

In legal terms, as long as there is another equally or more likely explanation for the set of facts, the claimed causation is unproven. The more likely explanation is that global temperatures vary due to oceanic and solar cycles. The proof is clearly and thoroughly set forward in the post Quantifying Natural Climate Change.

Footnote: CO2 Concentrations Compared to WFFC

Contrary to claims that rising atmospheric CO2 consists of fossil fuel emissions, consider the Mauna Loa CO2 observations in recent years.

Despite the drop in 2020 WFFC, atmospheric CO2 continued to rise steadily, demonstrating that natural sources and sinks drive the amount of CO2 in the air.

See also: Nature Erases Pulses of Human CO2 Emissions

Temps Cause CO2 Changes, Not the Reverse

OPEC runs out of spare capacity, makes bullish case for oil

Mohammed Barkindo, the secretary general of OPEC, has warned that “OPEC is running out of capacity,” and that “with the exception of two or three members, all are maxed out.” PHOTO BY REUTERS/DADO RUVIC/ILLUSTRATION/FILE PHOTO

Eric Nuttall explains at Financial Post OPEC running out of spare capacity confirms our multi-year bull case for oil.  Excerpts in italics with my bolds.

Oil companies are going to be pumping high returns to investors
for much longer than people realize

Imagine life without insurance. The constant worry of an unexpected accident, such as your house burning down or car getting stolen, wreaking financial havoc without the economic certainty that everything would be OK in the end. This is where the world is heading in the next several months.

The Organization of the Petroleum Exporting Countries’ (OPEC’s) spare capacity, the oil market equivalent of insurance, has since the 1960s been available to avoid severe price spikes by smoothing out periodic supply disruptions caused by geopolitical events.

Now, owing to too many years of insufficient investment, as the needs of social spending and sovereign revenue dwarfed those of investing in incremental capacity during a multi-year period of low oil prices, OPEC’s spare capacity is set to become exhausted.  This imminent reality will be a watershed event and has enormous implications for the oil market that investors must urgently appreciate.

We have for more than a year argued the world was hurtling into an energy crisis of epic proportions that would result in a multi-year bull market for oil.

Our bullish thesis had four basic tenets:

♦  persistent demand growth for at least the next 10 years;
♦  the end of shale hyper-growth in the United States, defined as shale production growth rates that no longer exceed global demand growth;
♦  stagnant production growth from the global super-majors resulting from eight years of insufficient investment and, finally,
♦  the exhaustion of OPEC’s spare capacity.

The hardest of these four core assumptions to prove by far was the last one. U.S. shale growth rates could be forecasted by talking with oil executives and modelling corporate cash flows. One could easily see that spending by the super-majors had peaked in 2014, falling to half of those levels today, while also being burdened by increasing pressures to decarbonize, so we could predict and model stagnant growth for years to come. And demand growth was boosted in the short term by the emergence from global lockdown, and is supported over the medium-to-long term by the realities that limit alternatives from reaching enough critical mass to meaningfully displace oil in the next several decades.

OPEC’s spare capacity, however, was the tricky one. Monthly data released by several different sources can vary wildly. Given the strategic importance of oil revenue to many Gulf States, hard data on productive capacity has at times been viewed as state secrets and either difficult to get or taken with some skepticism. How then can we be so confident that OPEC’s spare capacity is nearing exhaustion? Because they just told us so.

Last week, the Royal Bank of Canada hosted a spectacular energy conference in New York with the highlight being a keynote speech by Mohammed Barkindo, the secretary general of OPEC. That same night, I had the good fortune to have dinner with him, which to an energy enthusiast was the equivalent of a tech investor getting to hang out with Elon Musk. I found him to be a warm, insightful, soft-spoken and, surprisingly, straight-talking gentleman.

In his keynote speech, Barkindo warned that “OPEC is running out of capacity,” and that “with the exception of two or three members, all are maxed out.” Further, “the world needs to come to terms with this brutal fact” and that it is a “global challenge.”

Why is this so incredibly important? Well, what would happen if the U.S. Federal Reserve ran out of hard currency? It would just simply print more, with fresh bills sent to banks via armoured car the next day.

For oil producers, the cycle time to produce more oil is measured not in days, but in years.

With short-cycle U.S. shale set to grow at a fraction of historical rates, the world is now almost entirely dependent on long-cycle production, yet the global super-majors are entrenched in a multi-year period of stagnation due to too many years of underspending, and now OPEC, out of incremental capacity, is constrained by the very same challenge.

With oil inventories already at multi-year lows, demand back to pre-COVID-19 levels and structural challenges to supply growth, we believe oil prices will have to act as a demand-destroying mechanism, rising to a high enough level that kills discretionary demand, thereby balancing the market, while also staying there long enough to give the super-majors the confidence needed to start adequately spending again.

Given industry cycle times of four to six years, we believe that oil companies are set up to return egregiously high returns to investors for much longer than people realize, leading to a rerating from valuation levels that still imply the end of oil is nigh.

Eric Nuttall is a partner and senior portfolio manager with Ninepoint Partners LP.

 

The Looming Energy Catastrophe

Ron Stein provides a briefing from California on the energy debacle imposed by clueless political leaders on ordinary Americans.  Excerpts in italics with my bolds H/T CFACT

The Looming Energy Catastrophe

Please enjoy and share this educational energy literacy briefing, a 5-minute video by Costa Mesa Brief at a California Chevron gas station. The video talks about the outrageous gas prices and tells us what is behind the increases, where it is heading and what, if anything, we can do about it. I think you will find his no-nonsense approach and perspective unique, sobering and very informative.

The video explains the impact on fuel prices from California government-imposed reductions in the supply chain of crude oil has increased imported crude oil from foreign countries from 5% in 1992 to more than 60% today of total consumption. Biden’s pledge stating, “we are going to get rid of fossil fuels,” is impacting fuel prices.

At today’s price of crude oil well above $100 per barrel, the imported crude oil costs California more than $150 million dollars a day, yes, everyday, being paid to oil-rich foreign countries, depriving Californians of jobs and business opportunities, and forcing drivers to pay premium prices for fuel.

Californians are consuming more than 50 million gallons of fuel daily for its 35 million vehicles, which is slightly more than one gallon per day per vehicle.

Californians continue to pay more than $1.00 more per gallon of fuel than the rest of the country primarily for the State, Federal and Local taxes, and the Government environmental compliance programs such as the Low Carbon Fuel Standard (LCFS), Cap and Trade, Renewable Fuel Standard (RFS), and the Underground Storage Tax. Those costs ‘dumped” onto the posted price at the pump are not transparent to the public.

The demand for fuels to move the heavy-weight and long-range needs of more than 50,000 jets for the military, commercial, private and the President’s Air Force One, and the more than 50,000 merchant ships that move products throughout the world are also manufactured from the supply of crude oil.

Life Without Oil is NOT AS SIMPLE AS YOU MAY THINK as renewable energy is only intermittent electricity from breezes and sunshine as NEITHER wind turbines nor solar panels can manufacture anything for society. Climate change may impact humanity, but being mandated to live without the more than 6,000 products and the various fuels manufactured from crude oil will necessitate lifestyles being mandated back to the horse and buggy days of the 1800’s.

When the public continues to demand increasing needs for the transportation fuels and the products made from crude oil, limiting its supply by governments and the Environmental, Social and Governance (ESG) movement to manufacture those items is a guarantee for today’s shortages and inflation.

Life without crude oil could be the greatest threat to civilization’s eight billion residents, resulting in billions of fatalities from diseases, malnutrition, and weather-related deaths.

G7 Ministers Pledge Energy Hari-Kari

G7 Climate, Energy and Environment Ministers’ Communiqué, Berlin, May 27th, 2022

Excerpts in italics with my bolds

Recognising that accelerating the international clean energy transition and phasing out continued global investment in the unabated fossil fuel sector is essential to keep a limit of 1.5 °C temperature rise within reach, we commit to end new direct public support for the international unabated fossil fuel energy sector by the end of 2022, except in limited circumstances clearly defined by each country that are consistent with a 1.5 °C warming limit and the goals of the Paris Agreement. (pg. 33)

We note with concern the scale of private finance currently still supporting non-Paris aligned activities especially in the fossil fuel sector. (pg. 22)

We are thus further strengthened in our resolve to accelerate the clean energy transition towards a net zero emissions future by 2050, while also keeping energy security and affordability at the core of our action, including through the rapid expansion of low-carbon and renewable energies and an increase in energy efficiency.  (pg. 29)

In this regard, we acknowledge the IEA net zero scenario which suggests that G7 economies
invest at least US$1.3 trillion in renewable energy including tripling investments in clean
power and electricity networks between 2021 and 2030. (pg. 31)

We confirm our strong financial commitments for the market ramp-up of low-carbon and renewable hydrogen and its derivatives, thereby signalling an irreversible shift towards a world economy based on low carbon and renewable energy sources. (pg. 31)

In view of the Russian attack on Ukraine, financial support for companies and citizens affected by severely rising prices for fossil fuels is now on the political agenda for several countries. Nevertheless, we aim for our relief measures to be temporary and targeted and we reaffirm our commitment to the elimination of inefficient fossil fuel subsidies by 2025. (pg. 32)

We also highlight that we have ended new direct government support for unabated international thermal coal-fired power generation by the end of 2021, including through Official Development Assistance, export finance, investment, and financial and trade promotion support. (pg. 33)

We commit to increase national efforts to decarbonise building heating and cooling systems by using appropriate policy tools, including regulations and incentives, with the ultimate objective of transitioning away from fossil fuels. (pg. 37)

This will also guide our approach in public finance institutions and on the boards of MDBs and bilateral DFIs. We therefore call on other major economies, the MDBs and bilateral DFIs, multilateral funds, public banks and relevant agencies to also adopt these commitments. We commit to review our progress against our commitments. (pg. 33)

(Note: Multilateral Development Banks (MDBs), Development finance institution (DFIs)

See also Michael Kelly on Energy Utopias and Engineering Realities synopsis Kelly’s Climate Clarity

And Dieter Helm Seeking Climate and Energy Security

Fuel Efficiency Rule De Facto EV Mandate

Kevin Stone explains at Heartland Daily News. Fuel Producers, States Challenge New EPA Rule Effectively Mandating Electric Vehicles.  Excerpts in italics with my bolds.  H/T John Ray

An unlikely coalition is challenging the U.S. Environmental Protection Agency’s (EPA) revised fuel economy rules.

At issue is a revised fleetwide. corporate average fuel economy (CAFE) standard of 55 miles per gallon in model year 2026. The shortened timeline for the much higher fuel economy forces automakers to reduce their fleets’ carbon dioxide emissions by 22.6 percent more than previous rules required.

Sixteen states, plus groups representing the fossil fuel and ethanol industries in 15 states, are challenging the Biden EPA’s emissions rules. They argue the EPA’s new standards effectively mandate a national transition from internal combustion powered vehicles to electric vehicles starting in 2026.

Farmers, Drillers, Attorneys General

A mix of corn and soybean growers associations from the states of Illinois, Indiana, Iowa, Michigan, Minnesota, North Dakota, Ohio, and South Dakota joined with Diamond Alternative Energy in one of the lawsuits filed to block the EPA’s new rules.

In addition, Texas Attorney General Ken Paxton filed a lawsuit on behalf of Texas, joined by the states of Alabama, Alaska, Arkansas, Indiana, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Ohio, Oklahoma, South Carolina, and Utah. Arizona filed a separate lawsuit to block the rules.

The Competitive Enterprise Institute (CEI), along with additional petitioners such as the Domestic Energy Producers Alliance, a nationwide coalition of 39 associations representing the oil and gas industry, also filed a lawsuit to block the new standards.

Essentially an EV Mandate

The lawsuit filed by representatives of various states’ biofuel associations argues the new standard is an unauthorized de facto mandate forcing people to use electric vehicles.

“Through the final rule, EPA seeks to unilaterally alter the transportation mix in the United States, without congressional authorization and without adequately considering the vast greenhouse gas reduction benefits provided by renewable fuels,” the complaint states.

CEI and its co-petitioners make a similar argument in their filing by lead attorney Devin Watkins, saying the rules exceed the agency’s authority.

“EPA is trying to transform the motor vehicle market from gas-powered to electric vehicles by making gas-powered cars more expensive,” Watkins’ petition states.

Ambitious or Unworkable?

The EPA’s new standard and timeline are unrealistic because the mass adoption of electric vehicles and construction of the infrastructure needed to support and power them won’t magically appear overnight, says Paul Driessen, a senior policy advisor with the Committee For A Constructive Tomorrow, which co-publishes Environment & Climate News.

“It’s vital to remember that President Joe Biden, Rep. Alexandria Ocasio-Cortez (D-NY), and other climate-focused activists aren’t talking about just replacing current fossil fuel vehicle use or electricity generation,” said Driessen. “They also want to convert home and office heating, cooking, and water heating to electricity; convert factories from coal and gas to running on wind- and solar-generated electricity; and have massive battery modules as backup power for windless, sunless days.

“That means nearly doubling existing U.S. electricity generation, and doing all of it with intermittent, unreliable, weather-dependent power generation systems,” said Driessen. “It means millions of onshore and offshore wind turbines, billions of solar panels, billions of 1,000-pound battery modules, and thousands of new transformers, covering tens of millions of acres, all powered by wind and sunshine, and all connected via thousands of miles of new transmission lines to power users all across America.”

‘It Is a Pipedream’

Electrifying the transportation system and in fact the entire U.S. economy is a fool’s errand, doomed to fail while placing an unnecessary burden on the public, says Driessen.

“They expect, hope, and fantasize this will somehow work, that a massively stressed power grid never built or tested before will be able to handle huge, sudden electricity surges and cutoffs due to wind and sunlight cooperating with demand only incidentally, failing minutes, hours, or days at a time and crashing repeatedly and catastrophically,” said Driessen.

“It is a pipedream that has failed everywhere it’s been tried on much tinier scales than what they intend to impose on us,” said Driessen. “Think of Texas two winters ago, and South Australia a few years ago, multiplied a thousand times over. We’re going to be asked to accept having electricity for every aspect of our industry, hospitals, and lives, when it’s available instead of when we need it.”

It’s ‘MAGIC’

There is no way the United States can get the needed raw materials and do the infrastructure transformation required by the EPA’s and other agencies’ new rules implementing Biden’s “whole of government approach” to fighting climate change, says Driessen.

“Just getting the metals, minerals, plastics, concrete, and other raw materials to create this system will take mining at scales unprecedented in human history,” said Driessen. “Team Biden seems to think this will just happen, under a government-mandated program you could call Materials Acquisition for Global Industrial Change, abbreviated MAGIC.

“This new, unworkable system would totally bankrupt America,” said Driessen. “Energy analyst David Wojick, Ph.D. calculates that building a battery system to back up just New York City’s current peak electricity needs, not counting new electric cars or future growth, for one week of no wind or sunshine would cost $3 trillion! For all of New York State, it would cost $8 trillion. And that’s just New York.”

 

 

Pipe Dreams: How America Is Energized

Kite and Key Media provides a primer on America’s Energy supply in the above video and transcript below in italics with my bolds.

Pipe Dreams: How America Gets Energy.
The Backbone of America’s Energy Infrastructure

In the winter of 2022, the world watched in horror as Russian forces invaded Ukraine.  The question on everyone’s mind: “How did they think they could get away with this?”

One very good answer to that question: Because over 40% of the natural gas Europe relies on to keep itself warm during the winter … comes from Russia.  And standing up to the people who are keeping you from freezing … is a tall order.

Now, if you’re an American, this scenario might seem unthinkable. After all, the U.S. produces more natural gas than any other nation in the world.   We’d never have to rely on a hostile nation to keep ourselves warm.

Or at least that’s what you’d think…
…unless you were there the day that Russian gas pulled into Boston harbor.

Here’s a simple test to determine whether you live in a prosperous society: Do you ever worry about where you’re going to get the necessities of life?

Do you ever pull up to the gas station and worry that the pumps might be empty? Do you ever go to switch on the lights and worry that nothing will happen?

Most of the time, the answer is ‘no’ … which is why it’s so terrifying when the answer is ‘yes.’

Blackouts in Texas in early 2021. Over 10,000 gas stations running dry after a cyberattack only a few months later.   What do those incidents have in common?

They demonstrate what happens when pipelines aren’t working.

If America’s energy supplies are the lifeblood of our economy, then we can think of pipelines as something like the nation’s circulatory system.

In the U.S., pipelines are used to bring us about 90% of our petroleum and virtually all of our natural gas — which is pretty significant, given that those two power sources alone make up about 70% of the country’s entire energy use.

That’s why America has over 2.6 million miles worth of pipelines. Because without them … the whole country gets very Amish very fast.

But, as you may have noticed … not everyone is thrilled about this. In recent years, legal challenges have led to the cancellation of several major pipelines and delays for many others. From 2009 to 2018, the time it takes to get pipelines approved increased by more than 50%. 

So, what’s happening here? The objections to pipelines rest primarily on two critiques. The first is that they’ll contribute to carbon emissions. The second is that pipeline accidents could lead to oil spills.

And both of those claims … really require context to understand.

When it comes to carbon emissions, it’s important to know that the pipelines themselves aren’t really the issue. They’re just a mode of transportation.

The carbon emissions come from the petroleum and natural gas that flow through the pipelines. But here’s the catch: Getting rid of the pipelines … doesn’t mean getting rid of the emissions.

Cancelling the Keystone XL pipeline, for instance, may have felt like a win for the environment — but it’s not like that oil is gonna stay in the ground as a result. In fact, much of it is likely to be shipped to China — which isn’t exactly a low-emissions trip.

And we can probably expect to see more of that. Current government projections are that, even with a steep increase in the use of renewable fuels, we’ll still be getting about 2/3 of our energy from natural gas and petroleum … 30 years from now.

Refusing to build pipelines won’t change that reality …
but it will make the system we actually have much harder to operate.

Which gets to those concerns about safety. Do accidents occur with pipelines? Yes. It happens. However, accidents occur with all forms of energy transportation. So, the real question is what’s safest among the available options.

And on that front … pipelines do pretty well. Because if you’re not going to move fuel through the ground, you only have three other options: put it on trains, put it on trucks, or put it on boats.

Now, none of those methods is especially dangerous, but pipelines spill a lower percentage of the oil they transport than any method except boats.  And boats have … limited utility on this front. Because they still need fuel in Nebraska … and America’s 26 other land-locked states. 

So, what does a world without pipelines look like?
We already sorta know the answer.

The reason that Boston was getting gas from Russia, for instance, was because the state of Massachusetts refused to allow a pipeline to bring it from Pennsylvania. That’s the same reason, by the way, that, in January of 2022, the citizens of Boston … were paying 400% more for natural gas than those Pennsylvanians only 200 miles away — in the middle of a New England winter.

Here’s the reality: None of us are willing to live in a world where the lights don’t reliably come on or gas doesn’t reliably come out of the pump. We can aspire to a future powered by cleaner energy sources, but until that day comes … we’re going to be relying on fuel sources like petroleum and natural gas.

Which means we either rely on pipelines…

…or rely on places like Moscow…

…or get very comfortable with horses.

 

Vexing Truths About Energy

Philip Dick’s insight has a corollary:  Reality is also that which doesn’t happen no matter how much you want it to.  Chris Wright explains the contradictions with energy fantasies in his Denver Gazette article Inconvenient truths about energy.  Excerpts in italics with my bolds and added images.

The energy transition is not happening. Or not nearly at the pace that everyone believes or wishes. At current rates the “transition” is set to finish in the mid-2600s. The U.N. Rio Convention and subsequent Kyoto Protocol launched the energy transition drive in 1992. Global energy consumption from hydrocarbons has grown massively since then, with market share only declining by four percentage points over the last 30 years from 87% in 1992 to 83% today. I am not celebrating this fact as I have spent years working on energy transition technologies.

The energy transition isn’t failing for lack of earnest effort. It is failing because energy is hard, and 3 billion people living in energy poverty are desperate for reliable and scalable energy sources. Meanwhile, 1 billion energy-rich people are resistant to diminishing their standard of living with higher cost and an increasingly unreliable energy diet.

There is no “climate crisis” either. If there is a term more at odds with the exhaustive literature surveys of the Intergovernmental Panel on Climate Change (IPCC) than “climate crisis,” I have not heard it.

Climate change is a real global challenge that is extensively studied. Unfortunately, the facts and rational dialogue about the myriad tradeoffs aren’t reaching policy makers, the media, or activist groups. Or are they are simply ignoring these inconvenient truths?

For example, we hear endlessly about the rise in frequency and intensity of extreme weather. This narrative is highly effective at scaring people and driving political action. It is also false. The reality is detailed in countless publications and summarized in the IPCC reports. Deaths from extreme weather have plunged over the last century, reaching new all-time lows last year, an outcome to be celebrated. This is not because extreme weather has declined. In fact, extreme weather shows no meaningful trend at all.

Deaths from extreme weather events have declined because highly energized, wealthier societies are much better prepared to survive nature’s wrath.

My Mind is Made Up, Don’t Confuse Me with the Facts. H/T Bjorn Lomborg, WUWT

Recognizing reality

You are not supposed to say out loud that there is no climate crisis or that the energy transition is proceeding at a glacial pace. These are unfashionable and, to many, offensive facts. But let’s be honest. Energy transition ambitions must recognize reality. Otherwise, poor investment decisions and regulatory frameworks will lead to surging global-energy and food prices. This is exactly what is happening. We are here today in large part because energy transition efforts that previously encompassed solely aggressive support of alternative energy policies, economics be damned, have recently supplemented this strategy with growing efforts to obstruct fossil fuel development.

Fossil fuels make the modern world possible.

The real crisis today is an energy crisis. It began to reveal itself last fall with a severe shortage in globally traded Liquified Natural Gas (LNG). The LNG crisis has not abated and it gives Russia’s Vladimir Putin tremendous leverage over Europe. Without Russian gas, the lights in Europe go out. Amid war, public outrage, and intense sanctions, Russian gas flows to Europe remain unchanged. Russian oil exports have continued with minimal interruption. The world can talk tough about sanctioning Russian energy exports, but those exports are vitally needed; hence they continue. Energy security equals national security.

The world energy system, critical to human wellbeing, requires meaningful spare capacity to handle inevitable bumps in the road. In the electricity sector, which represents only 20% of global energy but 40% in wealthy countries, this is called reserve capacity. In the oil market, spare production capacity today is shrinking and concentrated in OPEC nations like Saudi Arabia and the United Arab Emirates. Also, there is a massive global storage network in both surface tanks and underground caverns. In natural gas markets, there are both extensive underground storage reservoirs and typically spare export capacity through pipelines and large industrial LNG export and import facilities.

The last several years have seen this spare capacity whittled away due partly to lower commodity prices and poor corporate returns shrinking the appetite to invest.

Excess capacity has also shrunk due to regulatory blockage of critical energy infrastructure like pipelines and export terminals. Roadblocks for well permitting and leasing on federal lands, together with a mass public miseducation campaign on energy and climate alarmism, are also stymieing hydrocarbon development. Investment capital is further constrained by a corporate Environment, Social and Governance (ESG) movement, and divestment campaigns. These factors are shrinking hydrocarbon investment below what it otherwise would be in response to price signals and outlook for supply and demand.

The net result is a constrained supply of oil, natural gas, and coal, which means higher prices and greater risk of market dislocations like the one unfolding today.

High energy and food price inflation is the cruelest form of tax on the poor. After a few specific examples, I’ll return to what we should do now to reverse these damaging and deeply inequitable trends.

In denial about demand

Why does the world today suffer from a severe shortage of LNG? Demand for natural gas has been growing strongly for decades. It provides a much cleaner substitute for coal in electricity production, home heating, and a myriad of industrial and petrochemical uses. Rising displacement of coal by natural gas has been the largest source of GHG emission reductions. Unfortunately, the aforementioned factors have prevented supply from keeping pace with rising demand. Energy shortages drive rapid prices rises and have cascading impacts on everything else. Energy is foundational to everything humans do. Everything.

Perhaps the most critical use of natural gas is nitrogen fertilizer production. Roughly a century ago, two German chemists, both subsequently awarded Nobel Prizes, developed a process to produce nitrogen fertilizer on an industrial scale. Before the Haber-Bosch process innovation, nitrogen content in soil was a major constraint on crop productivity. Existing nitrogen sources from bird guano, manure, and rotating cultivation of pea crops were limited. Today, elimination of natural gas-synthesized nitrogen fertilizer would cut global food production in half.

The now six-months-long LNG crisis translates into a worldwide food crisis as skyrocketing fertilizer prices are cascading into much higher food prices. Wheat prices are already at a record high and will likely head higher as spring plantings suffer from under fertilization.

Global LNG markets are tight because rising demand has outrun the growth in LNG export capacity in the United States, now the largest LNG exporter. We have an abundance of natural gas in the United States. Unfortunately, we have a shortage of pipelines to transport this gas and LNG export terminals, preventing us from relieving the energy crisis in Europe and around the world. These pipeline and export terminal shortages are due in large part to regulatory blockage. The result is that natural gas prices in the United States and Canada are five to ten times lower than in Asia and Europe. This deeply disadvantages consumers and factories (like fertilizer factories) in Europe and Asia that rely on LNG imports to fulfill their needs.

Failed energy policies

Russia’s invasion of Ukraine did not cause today’s energy crisis. Quite the reverse. Today’s energy crisis is likely an important factor in why Russia chose to invade Ukraine now. Europe’s energy situation is both tenuous and highly dependent on Russian imports. Russia is the second-largest oil and natural gas producer after the United States. Russia is the largest exporter of natural gas, supplying over 40% of Europe’s total demand. Additionally, Russia is the largest source of imported oil and coal to Europe. Europe put itself in this unenviable position by pursuing unrealistic, politically-driven policies attempting to rapidly transition its energy sources to combat climate change.

Europe’s energy pivot has been a massive failure on all fronts: higher energy costs, grave energy insecurity, and negligible climate impacts.

Germany is the poster child of this failure. In 2000, Germany set out to decarbonize its energy system, spending hundreds of billions of dollars on this effort over the last 20 years. Germany only marginally reduced its dependence on hydrocarbons from 84% in 2000 to 78% today. The United States matched this 6% decline in hydrocarbon market share from 86% in 2000 to 80% today. Unlike in the US, Germany more than doubled its electricity prices — before the recent massive additional price increases — by creating a second electric grid. This second grid is comprised of massive wind and solar electric generating sources that only deliver 20% of nameplate capacity on average, and often less than 5% for days at a time. The sun doesn’t always shine and the wind doesn’t always blow. Hence, Germany could only shrink legacy coal, gas and nuclear capacity by 15%. It now must pay to maintain both grids. The legacy grid must always be flexing up and down in a wildly inefficient manner to keep the lights on, hospitals functioning, homes heated, and factories powered. Outside of the electricity sector, Germany’s energy system is largely unchanged. It has long had high taxes on gasoline and diesel for transportation, and lower energy taxes on industry. Germany subsidizes industrial energy prices attempting to avoid the near-complete deindustrialization that the UK has suffered due to expensive energy policies across the board.

Over the last 20 years, the United States has seen two shale revolutions, first in natural gas and then in oil.

The net result has been the U.S. producing greater total energy than consumed in 2019 and 2020 for the first time since the 1950s. The U.S. went from the largest importer of natural gas to the second-largest exporter in less than fifteen years, all with private capital and innovation. The shale revolution lowered domestic and global energy prices due to surging growth in U.S. production. Surging US propane exports are reducing the cost and raising the availability of clean cooking and heating fuels for those in dire energy poverty still burning wood, dung, and agricultural waste to cook their daily meals. U.S. GHG emissions also plunged to the lowest level on a per capita basis since 1960. Imagine the world’s energy situation today with the American shale revolution.

We are starting to hamstring and squander the enormous benefits of the shale revolution. The same misinformed anti-hydrocarbon crusade that impoverished Europe and made it heavily dependent on Russia is now sweeping the US. California and New England had already adopted European-style energy policies driving up electricity prices, reducing grid reliability, and driving manufacturing and other energy-intensive, blue-collar jobs out of their states. Colorado is not far behind.

California, a state with a plentitude of blessings, managed to create the highest adjusted poverty rate in the nation with an expensive, unstable power grid increasingly reliant on coal-powered electricity imports from Nevada and Utah.

New England’s proximity to Pennsylvania’s clean low-cost natural gas resources was a stroke of luck. But it refused to expand the natural gas pipelines running from Pennsylvania, leaving it chronically short of natural gas, its largest source of electricity and cleanest option for home heating. Instead, it remains heavily reliant on fuel oil for home heating and occasionally imports LNG from Russia to keep the lights on. Last winter New England burned copious amounts of fuel oil to produce electricity which went out of fashion in the 1970s elsewhere in the US.

Texas has not been immune from energy illiteracy and collateral damage. Texas’ poorly designed electric grid, structured to encourage investment in renewables, led to hundreds dying last year in the Uri cold spell. No one would pay the same price for an Uber that showed up whenever convenient for the driver and dropped you off wherever they desired. But that is what Texas does with electricity: paying the same price for reliable electricity that balances the grid as they do for unreliable, unpredictable electricity. No wonder the reliability of the Texas grid has declined and is headed for more trouble.

Misplaced faith

The common thread in these cases is unrealistic beliefs in how rapidly new energy systems can replace demand for hydrocarbons, currently at all-time highs. Political intervention and miscalculation have led to over-investment in unreliable energy sources and, far worse, under-investment in reliable energy sources and infrastructure. The full costs of this colossal malinvestment have been somewhat hidden from view as spare capacity in the global energy network has mostly kept the train on the tracks. Now that excess capacity has shrunk to a critically low level, more impacts are hitting home.

Like the disease itself, the cure takes years to run its course. But that longer time frame is no excuse not to act now in a thoughtful fashion to begin rectifying historical blunders.

Steel, cement, plastics and fertilizer are the four building blocks of the modern world and all are highly reliant on hydrocarbons.

Most critically this means removing the growing myriad obstacles to hydrocarbon development, justified in the name of fighting climate change. This is nonsense. Overly cumbersome hurdles to hydrocarbon development in the U.S. do nothing to change oil and gas demand. They simply displace U.S. production overseas where production practices are less stringent and less ethical. Resulting in increased GHG emissions and other air pollutants, reduced economic opportunities for Americans, and increased geopolitical leverage of Russia and OPEC — see the invasion of Ukraine.

Climate change is a long-term problem best addressed with technologies cost-effective today like natural gas, energy efficiency, and nuclear. The solution requires combining today’s commercial low-carbon energy sources with research and technology development in carbon sequestration, next-generation geothermal, and economical energy storage to make solar and wind more viable.

Today the price mechanism must destroy energy demand to bring it in line with short-term supply. This reduces the quality of living, especially for low-income families. The price mechanism will also incent new supply to the extent possible in the face of growing regulatory hurdles, infrastructure shortages, and capital starvation. A revaluation of all three of these factors is urgently needed.

♦  Is the overarching goal “energy transition” at all costs?
♦  Or is it humane policies that better human lives and expand opportunities for all?

We need to replace the former mindset with the latter.

Chris Wright is chairman and CEO of Liberty Energy, a Denver-based hydraulic fracturing company. Read “Bettering Human Lives”, a report released last year for more information on the above issues.