ENERGY IN THE PRESIDENTIAL ELECTION
March 17, 2020 § 2 Comments
Energy showed up in the Democratic Presidential Debate, albeit not as a central issue; COVID-19 took care of that, closely followed by the ghosts of past senate votes. Sanders wanted elimination of fossil fuels; I was not clear whether this referred only to domestic production or also domestic use. For purposes of argument I will assume both. There was little doubt that production was a target, because he called for an end to frac’ing, which is the primary means for domestic oil production. But he also mentioned electric vehicles, giving weight to the second category.
When challenged by Sanders on the frac’ing issue, Biden used the time-honored debating technique of answering the question he wanted to hear. Incidentally, this direct questioning of each other was tolerated and added spice. Biden’s response was along the lines of Obama era policies: no drilling on federal lands and similar prohibitions. Sanders too used the same technique during the climate change portion. When asked by the moderator how he squared his banning frac’ing with the evidence that frac’ing was responsible for carbon reduction, through displacement of coal-based electricity, he simply ignored the question and gave some response that I forget. He missed a bet by not proffering a “yes, but” response getting into the risks to human health, largely unrealized, but good debating material. The pluses and minuses are in my 2016 book Shale Oil and Gas, the Promise and the Peril. RTI Press will send you a free soft copy if you let me know.
How relevant was all this to the primary process? Probably not much. A quick search of opinions on the debate shows almost no mention of the points raised above. I suspect Sanders raised the issues largely because they resonated well with his constituency. Banning frac’ing is a classic progressive rallying cry. Or used to be. Virtually zero mention in the talking head analyses indicates something.
But, will energy be a significant issue in the title bout? Depends on who has the Democratic nomination. Sanders would certainly make climate change an issue; Biden may as well, but likely not as stridently. Sanders will use it to attack fossil fuels and frac’ing. Trump’s support of the oil industry is solid, including permitting drilling on federal lands. Nevertheless, he did, inexplicably, applaud the recent plummet in the price of oil, because it enabled cheaper gasoline.
Biden, on the other hand, will likely evade oil and gas altogether. If this issue comes up it will be because the Trump camp raises it. The only real policy differences with Trump appear to be on drilling (and likely, frac’ing) on federal lands and the Arctic (which will not involve frac’ing). As to the latter, the likelihood of any oil company action in the Arctic at even USD 70 oil is minimal. The reason is that developments in the Arctic, even the slightly more benign versions in the Alaska National Wildlife Refuge (ANWR), are expensive. They would require stable high prices. The recent near halving due to COVID-19 combined with the Russia/Saudi spat will provide scant comfort. Used to be that wars were the primary reasons for volatility. Now we have added a pandemic.
One final word on the issue of oil, gas and sustainable alternatives. I have opined in these pages that oil must be displaced with dispatch in the transportation sector, and certainly the electricity sector. If you are experiencing a doubletake on the second point, note that the Saudis currently use nearly a million barrels per day to produce electricity. Diesel generators are the backups to power interruptions in innumerable locations. In transportation, electric vehicles are the future. But hurdles remain to speed the transition. A complete transformation is at least 15 years away, 10 if we do most things right. In the interim, continued domestic oil production is a national security issue.
Natural gas is a different story. Cheap natural gas from shale was arguably one of the most significant reasons for recovery from the recession of 2008. The chemical industry relying on natural gas as a raw material, returned to our shores in droves, bringing jobs and prosperity. Cheap natural gas rapidly displaced coal and dramatically reduced US carbon emissions. The US stopped importing LNG, and this effectively dropped gas prices worldwide. Russian ability to use gas as a weapon of political will in Europe was severely curtailed.
These are facts and inferences that politicians of all stripes must internalize. Also, that no form of energy comes without baggage. Finally, affordable energy raises all boats of economic prosperity.
Vikram Rao, March 17, 2020
“You may be right, and you may be wrong” from You May Be Right, 1980, performed and written by Billy Joel