Doubling Down on Fossil Fuels is a Mistake
By Hamilton Steimer
News headlines since the start of March have been dominated by the ongoing conflict in Ukraine. This conflict began with Russia’s sudden invasion of its neighbor state, and it now threatens to destabilize all of Europe and potentially the rest of the world. Fortunately, the US is only indirectly involved in the conflict thus far, providing military aid and funding to the Ukrainian resistance and enacting harsh economic sanctions on the Russian government, Putin, and his cronies.
In addition to the ever-updating news of the fighting’s progress, one other topic has simultaneously dominated American news headlines: rising oil and gas prices. Before the conflict, the US was already experiencing the worst inflation of the last 40 years, but over the past few weeks, gas prices have risen even further to levels not seen since the start of the Great Recession in 2008. President Biden’s recent announcement to ban the import of Russian oil will further damage the Russian economy and increase pressure on Putin, but it will contribute to even higher gas prices as the US must look for new suppliers. If Europe, which is Russia’s main oil and natural gas market, follows the example of the US, gas prices will rise even higher.
The war in Ukraine and subsequent impacts on oil and gas prices have significant climate implications. Climate advocates should be concerned to hear renewed calls from Republicans to double down on fossil fuels and increase domestic oil production, with some even attempting to connect rising gas prices to President Biden’s decision to end the Keystone XL pipeline. Should the war in Ukraine and sanctions on Russia continue for much longer, the high gas prices will amplify pressure on the White House to ramp up oil production, potentially putting the country’s climate goals at risk.
Extending our fossil fuel dependency is the wrong strategy
For so many reasons, as I will explain, this strategy is the wrong strategy. From not actually addressing the problem to continuing to pollute the earth, increasing our production and consumption of fossil fuels should be a non-starter for the Biden administration.
Republican claims are inaccurate
Contrary to Republican claims, experts have thoroughly explained why Biden is not to blame for skyrocketing gas prices. Firstly, prices began to rise back in November 2020 before Biden took office as the demand for oil began to rise. Secondly, the Keystone pipeline has no role in this energy crisis, as it was only 8% built when it was canceled, and it would have taken years for construction to be completed. Additionally, the oil and gas industry has about 9,000 already approved yet unused permits! While Biden has disallowed drilling in some locations, permitting has actually increased under his administration compared to Trump’s first three years in office.
The market is moving in the other direction
The renewable energy sector is growing rapidly, with wind and solar making gains on fossil fuels each year. Although natural gas has boomed over the last 15 years, renewable energy generation has almost doubled since 2010, and the Energy Information Administration predicts renewables will account for 40% of electricity generation by 2050. Prices are dropping rapidly, with wind energy and utility-scale solar costs decreasing 72% and 90%, respectively, since 2009. It seems likely that natural gas will remain a main energy source for the next several decades, but coal is fading fast, and oil use will decline as electric vehicles become mainstream.
We are running out of time to stop climate change
Ironically, the IPCC released the second publication of its Sixth Assessment Report when the Ukrainian conflict began and oil prices shot up. Focused on impacts, adaptation, and vulnerability, the report’s findings are not positive. Basically, the window to prevent the worst of climate change is closing, the risks are increasing, and the impacts are pushing ecosystems and animals to the limit of their adaptive ability. With the future already looking perilous, more fossil fuel drilling would be catastrophic.
More drilling would have no impact on the current crisis
What Republican’s fail to say is that no matter what action the Biden administration or fossil fuel industry take, the elevated fuel prices are here to stay while the war in Ukraine continues. With the Russian market locked out, the available global supply has functionally shrunk, resulting in elevated prices. The US may look for new suppliers, like Venezuela, but the claims that the US should drill our way out of this problem are non-sensical. It would take months to secure rigs, hire the necessary crews, secure equipment, and set up the infrastructure to drill and refine the oil into usable products. Drilling for more fossil fuels is not the answer.
We should go all-in on clean energy
Like with fossil fuels, even if the Biden administration went all in on clean energy immediately, it would not impact fuel prices. There is much to do to complete the clean energy transition. However, now is the time to further commit ourselves to this transition, to accelerate its arrival, and prepare ourselves for a potentially more volatile future.
The market is already shifting towards clean energy
Besides continued improvements in renewablw energy generation, you can see other massive changes throughout the entire economy that suggest clean energy is gaining a stronghold. 2021 felt like the year of the EV as numerous car brands announced new and exciting EV models, including the Ford F-150 Lightning, the Kia EV6, and Hyundai Ioniq 5. Municipalities and state governments are also passing new policies to further entrench clean energy as the way of the future. For example, Denver has issued plans for all new homes and buildings to be net zero emissions by 2030.
Clean energy prices are more stable and predictable
According to the EIA, construction costs for onshore wind and solar PV have been continuously declining over the past decade, compared to natural gas, which is their main competitor. With wind and sun predictable and ubiquitous, this leads to fairly consistent energy prices. Although natural gas is currently cheaper, like other fossil fuels, it is subject to price volatility due to weather events, supplier price hikes, and foreign conflicts. Renewables don’t see the same intense price increases that can affect fossil fuels. For example, in February 2021, the midwestern winter storm caused natural gas prices to spike over six times their regular price. At the end of February 2022, gas prices were around $3.61 per gallon on average, but since the start of the Ukrainian conflict, they’ve increased to over $4.30 per gallon.
We’re already behind in the fight against climate change
The first two parts of the IPCC’s Sixth Assessment Report are abundantly clear, that we are well behind in achieving our climate goals and preventing the worst of climate change. Biden’s failure to pass his watered-down version of Build Back Better agenda represents America’s failure to address climate change adequately. As the world’s largest economy and one of the greatest GHG emitters, we need to do more.
We need to resolve supply chain issues
The pandemic and now global energy crisis have emphasized the importance of robust, secure supply chains. Even the clean energy sector has learned the hard way that more must be done to ensure our supply chains are resilient. The clean energy sector is currently too reliant on foreign markets for key materials, particularly different metals used in battery production. Continued price reductions and technological improvements, like what we have seen over the past decade, may be at risk should we fail to secure our supply chains.
The automobile industry’s supply chain woes due to the pandemic are a perfect example of the importance of securing our supply chains. As the global economy began to awake in 2021, automobile manufacturers’ supply chains were slower than the rising demand, with there being a global shortage in semiconductor chips. The rise in vehicle demand and shortage in semiconductors lead to sharp increases in used and new vehicle prices. Electric vehicle manufacturers have also been impacted by the semiconductor crunch and more recently, the Ukrainian conflict. Russia is a main supplier of nickel, a key component of EV batteries, and with Russia locked out of the global market, the shortage in nickel supplies will create upward pressure on battery costs and EV prices, threatening continued EV market growth. For example, inflation and battery supply chain issues have caused Tesla, the most famous EV manufacturer, to raise prices across all of its vehicle models.
There have been some actions taken which suggest how we can ensure clean energy supply chains remain resilient and prices stay stable. For example, Ford recently suggested it has managed to escape the nickel supply chain crunch because most of its nickel supplies do not come from Russia. Limiting its exposure to this volatile market was a smart decision. GM, which is also growing its EV lineup, recently announced a multi-hundred million dollar manufacturing plant in Canada to strengthen its battery supply chain. These types of actions that limit exposure to volatile markets and internalize key steps of the manufacturing process are some of the actions that clean energy manufacturers can take to create jobs, build resilient supply chains, and maintain stable prices.