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The Folly of Ideology-Driven Energy Policies Takes Center Stage

A new flood of energy headlines is converging on a central theme: natural gas, oil and coal are critically necessary components of our energy mix and will remain so for the foreseeable future. Here's a small sample from just the recent past:

  • "Policymakers Now Confront a Global Energy Crunch"
         The Hill (10/15/21)
  • "Behind the Energy Crisis: Fossil Fuel Investment Drops, and Renewables Arent Ready"
         WSJ (10/17/21)
  • "California Scrambles to Find Electricity to Offset Plant Closures"
         WSJ (10/16/21)
  • "America's Next Hot Import Might Be Record Energy Prices"
         WSJ (9/20/21)

    Collectively they tell a consistent story: the ideological and illogical rush to axe fossil fuels from America's energy mix has created a cost and reliability nightmare here in America, while yielding little offsetting benefits to Earth's climate, given that the U.S. only accounts for 11% of global GHG emissions.

    In fact, it is having the opposite effect. Led by China, because of high prices and shortages of natural gas, power producers worldwide are scrambling to restart coal plants and shift flexible fuel units from gas back to coal and fuel oil. The Energy Information Administration recently projected that U.S. coal-fired electricity generation will rise by 22% in 2021 over 2020.

    The root causes of America's energy crisis go far beyond restrained investment by oil and gas producers. The Administration's anti-oil and gas regulatory policies have taken resource-rich producing regions off the table (Arctic, offshore and Federal lands). Legislative initiatives seek to tax natural gas production while eliminating long-settled tax provisions such as deductions for intangible drilling costs and depletion allowances. Given these policy risks, it's no wonder producers are reluctant to increase production even in the face of skyrocketing prices.

    It's also no mystery why pipeline operators have cancelled major projects, put others on indefinite hold, and have not proposed new greenfield projects in the face of a relentlessly adverse Federal regulatory regime.

    Constrained fossil fuel production and transport capacity is feeding an already adverse inflation trend and adding to growing supply chain bottlenecks that are making some consumer and industrial products unavailable at any price. As we head into winter, it looks like the worst is yet to come.

    So where is all this leading? First, the Administration seems finally to be discovering the inevitable and predictable consequences of its anti-fossil fuel crusade - skyrocketing energy costs fueling inflation. This is getting bad reviews across America. So is the specter of the President asking OPEC to produce more oil after he shut down Keystone XL, ended production leases on Federal lands and implemented other regulatory restraints on domestic production.

    Finding no help from OPEC, President Biden has turned to the very same people - American producers - whose output he has until now tried to choke off. Another recent headline underscores the irony: "Biden Suddenly Loves Frackers - After waging war on the industry, Biden wants its help to reduce gas prices" (WSJ Editorial Board 10/15/21).

    Equally ironic, all this is happening while the Administration's advocates on Capitol Hill are still fighting to eliminate fossil fuels from America's energy mix. Fortunately so far, Senator Joe Manchin appears to have single-handedly killed their centerpiece policy, the Clean Electricity Payments Program (CEPP), whose objective is to put an end to natural gas power generation, and about which we wrote in September: U.S. Energy Consumers Will Pay Dearly While China Drives Global Carbon Emissions.

    The point of all this is that we are beginning to sense an important change developing where it matters most: in the attitudes towards natural gas and oil among the people (voters) who choose our leaders. We hope those leaders are equally well tuned to their voters' evolving attitudes.

    EEIA will continue to remind them to listen carefully and consider the real-world impacts of their energy policies on the people they serve.

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