Sharpe: The green case for a strong oil industry
A scientific poll by the National Enquirer found that 5 out of 4 people (stupid fractions) enjoyed the balmy February weather. But they forgot to poll the polar bears. Yes, regardless the cause, it appears that climate change is in progress. In an all-out effort to reverse that direction (I believe the horse may have left the barn), the self-appointed Environmental Guardians are battling at every turn what they believe to be a major cause; the oil industry. I’m hoping by the end of this chat to have changed their perspective, or at the very least, to have caused them pause.
It’s the CONSUMPTION, Stupid!
While there are certainly some emissions during the drilling and production of oil and gas, they are dwarfed many times over by the emissions caused when those fossil fuels are consumed. It is ironic, in that regard, that 99 percent of the extremist agenda is focused on eliminating the domestic supply of fossil fuels, including oil and gas. Meanwhile, the consumption goes on unabated, because while we all want to reduce our carbon footprint, we really don’t want to reduce our energy footprint, which would dramatically impact our lifestyles.
The associated graph of historical US crude oil consumption tells the story quite well. Time Period 2 on the graph covers from 1986 to 2004, a period of relatively low, stable oil prices. During this time, U.S. production declined dramatically from 9 million barrels of oil per day (MMBopd) to 5.2 MMBopd. U.S. consumption, on the other hand, rose unabated from 13.3 MMBopd to a peak in 2005 of 17.7 MMBopd. It turns out that the Middle East was more than willing to fill the vacuum, as imports increased from 4.3 MMBopd to 12.6 MMBopd. Therefore, restricting production in the U.S. clearly has little effect on reducing our consumption.
Consumers are SO Self-centered!
Consumers may talk about saving the planet for future generations, but not if it’s going to cost any more RIGHT NOW! At the end of the day, most consumers act in their own economic self-interest. One of the greenest 1 percenters I know hasn’t yet bought that Tesla because he “can’t justify the expense.” And in Farmington, only six residents out of the 40 some thousand are willing to pay that higher surcharge for green electrons (which at night time, look a lot like the brown ones).
Higher Energy Prices WILL Change Habits
Looking at the consumption graph, Time Period 1 (1979-86) and Time Period 3 (2004-2013) are a primer in Economics 101. Oil prices spiked during both periods, and as a result, the ever-increasing U.S. consumption curve took a hit. In addition, the higher energy prices in Time Period 2, combined with some Obama incentives, resulted in unprecedented investments in wind and solar, causing dramatic growth in those sectors. You may not like this answer, but if we are going to dramatically reduce greenhouse gas emissions, we should expect to pay more for energy.
The Best of Both Worlds?
In 2004, the U.S. was in a tenuous situation. Our domestic oil industry was in the doldrums, and we were dependent on some very undependable crazies for over 70 percent of our crude supply. When prices rose, the industry reacted, almost doubling U.S. oil production in a few short years. (As a side note, ALL of that increase was on state and private lands, as the Obama administration continued to puke up regulation after road block to develop Federal lands.) Unfortunately, we were a victim of our own success, and oil prices collapsed in 2015 from over supply, taking the industry along with it. A CNN-Money report in August of 2016 claimed that 195,000 U.S. jobs had been lost in the industry over the prior 2 years; high paying jobs with salaries 84 percent greater than the national average. And I don’t have to tell any of Farmington’s preachers or teachers or candlestick makers that the loss of those primary jobs has a devastating ripple effect through the secondary economy.
Here’s an idea being advocated quite aggressively by Dan Fine of the New Mexico Center for Energy Policy — an oil import fee. This would result in raising oil prices, which would suppress the appetite of us relentlessly hungry consumers. In addition, it would stimulate investments into alternative forms of energy, both good things from the green perspective. Our domestic oil industry would rebound to the delight of candlestick makers everywhere.
It would bring in revenue to our bankrupt government, not just from the fees, but from royalties and taxes on the domestic production, and it would dramatically reduce our burgeoning trade deficit. Finally, as our consumption dropped and our production increased, perhaps we would see the day of 100 percent energy independence, and the crazies would lose their grip on our short hairs altogether.
Except for the higher energy prices, which are part of any “green scenario,” it looks all “win” to me!