Jennifer Rubin in Washington Post:
First, Biden made clear that while the United States can ban energy imports, the European Union is in a far different place, given the extent of its reliance on Russian energy. This is not a sign of “disunity” as some media and GOP pundits insist whenever the U.S. and E.U. are not in lockstep. This is reality.
However, Britain joined the United States in declaring it would end Russian oil imports by next year. And the E.U. did take an extraordinary step. The Post reports, “The European Commission on Tuesday presented a plan to cut Russian gas imports by two thirds this year, steeply reducing — but not severing — energy ties to Moscow. The proposal … is a dramatic shift,” given that 40 percent of the E.U.’s gas and 25 percent of its oil comes from Russia. Russian President Vladimir Putin’s invasion of Ukraine already spelled the death of the Nord Stream 2 pipeline; now, he is accelerating Europe’s energy independence. Once again, Putin’s gross miscalculation has had the opposite of his desired result.
Second, Biden also conceded up front that his ban would not be cost-free. “The decision today is not without cost here at home. Putin’s war is already hurting American families at the gas pump,” he said. “I’m going to do everything I can to minimize Putin’s price hike here at home.” However, he also warned oil companies against price-gouging.
Finally, and most important politically, Biden addressed the already prevalent and false accusation from Republicans that his administration has somehow hamstrung energy extraction domestically. He pointed out that 90 percent of drilling is on private lands, and of the 10 percent on government-owned land, more than 9,000 permits have been granted but sit unused. In short, don’t blame the federal government if domestic producers are not tapping existing supplies.
We should not be so naive to think Republicans will restrain themselves from making baseless accusations. In Republicans’ right-wing media bubble, Democrats are the enemy of cheap domestic oil. Therefore, while Republicans encouraged the import ban, the price hikes must be Biden’s fault. See how that works?
Three of the largest shale companies, Pioneer Natural Resources Co.PXD 0.31% , Devon DVN -0.68% Energy Corp. and Continental Resources Inc., CLR -2.55% this week reported their highest annual profits in more than a decade for 2021. The companies said they collected record amounts of extra cash by hanging on to the money they earn selling oil and natural gas and reinvesting only what they needed to keep output roughly flat. All three said they would continue to limit production growth this year.
They are pledging austerity despite a tightening oil-market supply. Global oil-production growth isn’t keeping pace with renewed demand as economies recover from the pandemic, and the threat of a Russian invasion of Ukraine is rattling markets. Those dynamics have alarmed the White House, which has asked U.S. producers to drill more as it confronts soaring gasoline prices and broad inflation.
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Ben Dell, managing partner at Kimmeridge Energy Management Co., an investor and advocate for oil companies to keep pumping flat and return cash to shareholders, said there is no reason to stray from that strategy.
“The only question investors should ask is why on earth would they want any U.S. [oil producer] to grow?” Mr. Dell said. “The sector has been working. Cash flow is getting returned. This is not the time to change the [new] business model.”
While fossil fuel proponents are proposing an increase in domestic fracking, that won’t solve the problem because oil companies say they need two to three years to increase U.S. production, so there’s not much they can do to help today. More importantly, because oil is a global commodity where every consumer pays the price largely determined by OPEC, more fracking doesn’t insulate U.S. consumers from spiking oil and gas prices. Finally, increasing domestic fossil fuel production worsens climate change.
The only foolproof way to increase U.S. energy security and inoculate consumers against oil and gas price swings from petro-states like Russia is to reduce our reliance on fossil fuels altogether.
Federal provisions Congress is currently considering include tax credits for clean electricity and electric vehicles, rebates for reducing energy consumption and electrifying buildings, and support for domestic manufacturing of clean technologies, among many others.
Energy Innovation modeled these provisions using the U.S. Energy Policy Simulatorto assess their potential to wean the U.S. off Russian oil and gas imports, improve domestic energy security, and protect Americans from volatile fossil fuel price spikes.
The results are dramatic.
In the moderate modeling scenario, Congressional climate and clean energy provisions would cut U.S. annual oil consumption by 180 million barrels per year by 2030, driven by increased electric vehicle sales. By 2025, reductions would be about half of Russian oil imports and would exceed imports by 2027.
So, in roughly the time frame it would take companies to scale up domestic production, we could be well on our way to eliminating demand for the product altogether.
Also in the moderate scenario, clean energy deployment and electrification of buildings and industry reduce natural gas consumption by 4.7 trillion cubic feet per year by 2030 – roughly equal to 85% of the European Union’s 5.5 trillion cubic feet of imported Russian natural gas in 2021.
Of course there’s a climate change upside to cutting U.S. fossil fuel dependence – the modeled Congressional provisions could cut U.S. greenhouse gas emissions by up to 1.2 gigatons in 2030.
“Putin’s war is already hurting American families….”
I do so love the decision to refer to it as “Putin’s war” rather than “Russia’s invasion [of Ukraine]”.