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The Death of Fossil Fuels?
The Left’s prediction of the death of fossil fuels is perhaps a little premature. As the Organization of the Petroleum Exporting Countries (OPEC) recently warned, without increased investment in new production, oil could skyrocket.
Crude prices hit $80/bbl on Tuesday.
Why the World Needs More Oil and Gas
Europe’s climate follies that have created “fuel shortages and price spikes that are rippling through global energy markets,” alerts the WSJ.
Demand for liquefied natural gas in Europe has soared due to waning wind production, the shutdown of coal and nuclear plants, and lower Russian gas deliveries. But there’s not enough LNG to supply Europe and the world.
In order to keep their lights bright, Asia and Europe are burning more coal, also in short supply. Increasing the disruptions, notes the WSJ, are closures of Chinese factories as local governments ration power. Gas-powered generators in Asia are switching to burning oil, also increasing crude prices.
If projections (Goldman Sachs) transpire of crude reaching $90/bbl by year-end, filling an auto tank, for anyone fortunate enough to come across an auto dealership with cars on its lot, will increase costs by 10 to 20 cents per gallon at the pump.
Meanwhile, White House Press Secretary Jen Psaki assured Americans on Tuesday that the Administration is speaking “to international partners, including OPEC” about “doing more to support the recovery.”
A Hostile Political Environment
What’s wrong, inquires the WSJ, with encouraging more U.S. production?
U.S. oil production remains 15% below pre-pandemic levels. About 20% of production in the Gulf of Mexico remains knocked out from Hurricane Ida. Even before the storm, U.S. oil and gas producers were curtailing investment amid a hostile political climate.
NY and NJ: Relying on Oil for Juice?
More bad news came Monday as energy companies scrapped a 116-mile pipeline to deliver gas from Pennsylvania to New Jersey due to regulatory obstructions.
Pipeline blockades by Democratic states in the Northeast have depressed gas prices and investment in the Marcellus shale in Pennsylvania. One ironic result is that, with gas in short supply, New York and New Jersey may wind up burning more oil for electricity this winter.
OPEC estimates that global oil demand will increase 8% over the next two decades from pre-pandemic levels as low-income countries industrialize. Even as the West pushes renewables and electric cars, oil and gas are forecast to make up roughly the same share of global energy in 2045 as they do today. Nigerians and Guatemalans won’t be driving Teslas.
OPEC predicts the Middle East will make up 57% of crude exports by 2045, up from 48% in 2019.
Contrary to liberals’ dismissing OPEC reports as self-serving, today’s energy shortages and price spikes are, as the WSJ reminds readers, a blaring reminder that the world needs more, not less, oil and natural gas.
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