Energy insecurity and gasoline prices are boosting renewables
It will take a generation to eliminate our reliance on fossil fuels, but if anything emerges from the energy disruptions of the past few years, it is that fossil fuel prices are subject to wild swings. As people travel less, the COVID-19 shutdown has reduced demand for fossil fuels and their prices. But when the shutdown ended, demand picked up but faced reduced supply as oil companies cut production to maintain prices during periods of reduced demand. The pump seems to be easier to turn off than to turn it back on. Russia then decided to invade Ukraine, further disrupting the flow of fuel. The top four fossil fuel producers in the world are the United States, Russia, Iran and Saudi Arabia. There is no doubt that US foreign policy has long been shaped by the need to ensure a smooth supply of fossil fuels to the world economy. Russian aggression, Iranian terror, Saudi murder, and the economic devastation of COVID-19 make this even more challenging. While energy insecurity has hurt America’s ability to advance its national interests around the globe, our global fossil fuel companies appear to be emerging from the latest turmoil with cash in their wallets.
As Colin Eaton recently stated in Wall Street Journal:
“… at the highest energy prices in more than a decade and Refining is lucrative. Exxon Mobil, the largest U.S. oil company, said on Friday that its second-quarter profit rose to a record high of $17.9 billion and nearly quadrupled the same period a year earlier, as oil and fuel production increased, higher energy prices and cost reduction. Rival Chevron also posted a record profit of $11.6 billion on Friday, up from $3.1 billion a year earlier. With 3 million barrels per day of global refining capacity shut down since the onset of the pandemic in 2020, companies have reaped historic profits from record fuel production profits. ExxonMobil Chief Executive Darren Woods said that while refining profits have slowed recently, the situation could take years to resolve before adding capacity comes online. “
This all comes at a time when gasoline prices are subject to incredible volatility. This time last year, American Automobile Association (AAA) According to reports, the average price of conventional gasoline in the United States is about $3.17 per gallon. June 14th The year’s high was $5. A month ago, the cost was $4.86, and this month it has dropped to $4.23. It’s impossible for a household or business to set and stick to a budget when a key commodity like gasoline changes prices frequently. Clearly, this commodity is the enemy of political and economic stability.
Last March, my friend and colleague, Admiral Dennis McGinn, wrote an article about the impact of fossil fuels on foreign policy after Russia’s brutal Russian invasion of Ukraine began.according to Admiral McGinn:
“The United States and our allies are once again caught in an inextricable conflict with the world’s addiction to fossil fuels. But if we heed the warnings and act decisively now, this could be the last global conflict. U.S. leadership in rapidly expanding clean, sustainable renewable energy nationally and globally will enhance our energy security, economic security, and environmental security, which are key factors underpinning our national security and quality of life… This is not a new story – from Iran to Saudi Arabia to Iraq and Venezuela – dictators gain strength from fossil resources within their borders because they control a finite resource and simply because we are addicted to it become valuable. When it comes to energy, most of the world’s history has been determined by the rich and the poor… The only way to reduce the power of gas and oil-fueled oligarchs and dictators is to stop our reliance on these sources of energy. When we no longer need to buy their products, we no longer allow them to use their fuel as a bullying tool for power and diplomacy. Rapidly expanding our renewable energy portfolio in the U.S. and our allies can protect us from the threat of dictators, price volatility, and continued fossil fuel-driven geopolitical disruption. This is the definition of true energy and national security in the 21st century. “
National security is affected by the control of fossil fuels by authoritarian regimes, and economic security is affected by the unstable supply and demand of fossil fuels. Big fossil fuel companies have done a terrible job of matching supply and demand, but have done a great job of profiting from market volatility. The answer to both forms of instability is stable, predictable energy that is not controlled by any single country or powerful corporation. Guess what, we have that source! It’s called the sun. Obviously, this transition to solar will take a long time to implement, but our drive to accelerate this transition has grown even stronger over the past year. Californians drive gas stations and spend $6 a gallon, motivated by heavy investment in solar panels, home battery systems and electric vehicles. Even if you have to rely on the grid to charge your car, at least prices are regulated by the state public utility commission and cannot be changed by the hour. Companies with delivery vans are also starting to use electric vehicles.
The greed and short-term thinking of oil companies will prove devastating. I would be shocked if these companies used their huge short-term profits to invest in the transition to renewable energy businesses. Profit-taking, lobbying for political influence, and “exercise baby drills” appear to be within the reach of these Western oil companies. They certainly didn’t consider lower margins to reduce price volatility. Obviously, their approach is to charge whatever the market can afford. In the short term, the American public has no choice. But electric vehicles and renewable energy are becoming more cost-effective every day. Fossil fuels are a dying industry.
The most credible sign is the agreement reached last week by Sen. Joe Manchin of West Virginia to promote renewable energy and fossil fuels. a few weeks ago, I criticized Manchin And noted:
“If Manchin wasn’t so clearly in the pocket of the fossil fuel business, he would have pushed for subsidies as well as a sited factory in his home state. But the terrible leadership in West Virginia doomed the state to economic trouble as they doubled down on the dying industry And refuses to turn to the future. West Virginia has a poverty rate of 17.7%, the fourth highest in the U.S. Only Mississippi, Louisiana and New Mexico fared worse. Manchin may be using his temporary influence to drive poverty reduction in his hometown ; instead, he is using it in vain to save the fossil fuel business.”
Well, my position is correct. In deal Manchin agreed, senators seek to back fossil fuels, renewable energy, And brought back bacon for his home state of West Virginia. As Brad Plumer and Lisa Friedman New York Times:
“This legislation, if passed, is expected to be of great benefit to West Virginia. It will permanently become a federal trust fund to support coal miners with black lung disease. It will be built for companies in areas where coal mines or coal power plants have recently closed New incentives for wind and solar farms. It will provide generous tax credits for emerging technologies supported by Mr Manchin, such as carbon capture and storage and low-emission hydrogen fuel.”
While fossil fuels will be needed for a generation as we transition to renewables, they will eventually be eliminated from the market due to price, pollution and the performance of renewables. Fossil fuels must be extracted, transported and burned from the earth. Every step costs money and pollution. With advances in solar cells, wind turbines and battery storage technology, solar and wind energy will become cheaper, more reliable and less polluting. The price of the base fuel is always free, a price advantage that fossil fuels will never enjoy. The future is clear, and if the bill that Chuck Schumer and Joe Manchin agreed to pass, it will get here sooner than we think.
