Oil Shocks
What will it take?
Here we are again. We’ve been here before — trapped in what seems like an endless circle of petro-imprisonment. The United States economy is being threatened by high gasoline prices, exacerbated by the Russian assault on Ukraine and the resulting suite of economic sanctions. And we aren’t alone. Oil is a global commodity, and price spikes reverberate everywhere.
Vladimir Putin’s power to threaten the safety and stability of the world lies in two main areas: fossil fuels and nuclear weapons. Both can be considered remnants of the last century, left to fester and menace our present age. Of the two, arms control is the trickier to resolve, because it requires agreement between two hostile powers. But oil and gas? We have no one to blame but ourselves.
The dangers of running the world on a non-renewable resource that just so happens to be pooled in some of the globe’s most repressive and dictatorial countries have long been evident. From a geo-strategic and economic viewpoint, we have put the wellbeing of our nation at risk. We have invested trillions in our national defense but remain addicted to a product whose price and global supply can be in large part determined by our enemies, or at least by less-than-ideal “allies” like Saudi Arabia.
We, of course, are not alone. Western Europe has long been tethered to Russia for its oil and gas needs, to an extent that has shaped the strategic decision-making on the continent for decades. And every country that belongs to the world economy, in ways big and small, is vulnerable to shocks around oil.
It would be bad enough if this were purely about energy needs and the economics around them. But there is a much bigger element to this story — the ominous immediate and long-term harm fossil fuels are inflicting upon our climate. The more we burn, the more the ticking time bomb grows bigger and the fuse shorter. We can already see escalating damage, disruptions, and displacement. For example, while the world has been preoccupied with Ukraine, another natural disaster has been unfolding in Australia, almost assuredly exacerbated by climate change:
We need to move beyond fossil fuels, as fast as possible. And I say this as a proud son of Texas, a state that has built its reputation and wealth in large part through the extraction of black gold. My father worked in the oil fields, and so did I, during summers growing up. I have nothing but respect for those who toiled in difficult and dangerous conditions helping make America go. We never would have defeated Nazi Germany if it weren’t for the roughnecks and coal miners.
But times change, and we must change with them. We have decades of data — from the fields of economics, geopolitics, public health, and environmental science — that point to one conclusion: The only future that makes sense is one fueled by alternative and renewable energy.
It is to be expected that Republicans looking to attack the Biden administration would hone in on current gas prices. But their goal is much bigger than merely scoring political points. They want to do the bidding of their deep-pocket backers in the oil industry, who are eager to leverage this crisis to push long-cherished objectives of more drilling, more pipelines, and a whole lot less environmental regulation.
So you end up hearing a lot about the Keystone XL pipeline, oil and gas leases on federal lands, and all sorts of other buzzwords that might as well be (and probably are) pulled directly from an ExxonMobil lobbyist cheat sheet. Some of these are so outrageous that The New York Times felt the need to fact check them:
(The Times called these claims “incorrect assertions;” I would prefer a blunter characterization.)
What is actually causing the jump in gas prices? It is often difficult to pinpoint exact cause and effect behind the movements of the oil markets. Certainly the pandemic has played a role. But according to Austan Goolsbee, an economic adviser for the Obama administration, and others, even before the invasion of Ukraine, the pain at the pump might have been partly attributable to Putin.
We are now mired, once again, in an energy crisis, and we must look at both short-term and long-term solutions. It is impossible to pivot from fossil fuels overnight; they are far too ingrained in our world’s basic functions. In the short run, we need to find ways to counter the shocks from Russia. And the Biden administration has noted that domestic production of oil has been constrained in recent years, as oil companies have focused more on stock buybacks and burnishing their financial health than in investing in greater supply. With oil company profits soaring alongside the rising price for crude, President Biden warned, "Russia's aggression is costing us all, and it's no time for profiteering or price gouging." Democrats in Congress are stepping in with their own response:
While the immediate focus should be on ensuring that high oil prices don’t wreck the U.S. economy, we must also end this destructive cycle once and for all. There is a reason why President Jimmy Carter’s name often trends on Twitter at times like these. More than 40 years ago, he famously installed solar panels on the White House to demonstrate his commitment to renewable energy. Imagine where we would be if the United States, and the world, had built on that instinct. All the innovation that would have taken place — and potentially an alternate history. Would there have been war with Iraq? Would Putin have been able to solidify his grip on power? What would be the health of the climate?
Tragically, we are where we are. But that can’t become an excuse for inaction. We are better prepared than ever for a post-carbon future. Technologies around solar panels are light years away (no pun intended) from the ones Carter installed. We have also seen breakthroughs in wind power, geothermal, and other renewable energies. And the electric vehicle market is surging, with new options in many categories, including pickup trucks.
These shifts must be global. Perhaps the threat posed by Putin can encourage other countries to act. And, encouragingly, there is already a sense that this is happening:
Those who are beholden to the dirty energy of the past would want to convince us all that we can’t have a healthy economy powered by new energy. They point to the short-term struggles and use them as rationale for shackling our future. We do need to solve the immediate challenges. We also need to recognize that any shift to new energy will be most disruptive to those who can least afford it. Many Americans are barely hanging on financially and have an old, gas-guzzling car as their only means of transportation and an uninsulated home as their residence. The change to a green future must work for them, too.
But how many times will we need to ride this merry-go-round of oil dependency, bouncing up and down on the rig pumps, before we realize that we need to get off? Let us absorb the shocks of the present as best we can. And let us also do the transformational work that will put us on the path of their never recurring.
Thanks Dan! On point as usual.
I agree that it is time to turn from fossil fuel. There is one major roadblock that must be overcome. At this time, only wealthy people can afford electric vehicles and solar panels on their homes!