The View from Right Field

“Getting mad at oil majors will not solve climate crisis”

This is a letter to the editor published in the Financial Times on today under the heading quoted above: 

“The title of your Big Read on energy ‘Big Oil: still profits before planet’ (February 11) was misleading.¹  Regardless of what environmentalists and elites may think, it is not the job of oil companies to solve climate change.

Climate change requires more than world leaders agreeing to a set of lofty ideals in Paris and then having businesses do all of the work for them.  It requires leaders to actually convince people that governments need to pass laws and adopt regulations to cut emissions.  Climate change isn’t going to be solved by getting mad at oil companies.  It’s going to be solved by adopting a carbon tax that will put the real cost of carbon emissions in the price of products.  Or establishing an emissions trading system, with a decreasing cap on total annual emissions, that guarantees emissions will be cut.

Are Investors Being “Un-American” for Not Drilling More?

An article in the Financial Times last Monday quoted Anne Hochstein, President Biden’s international energy envoy, as saying:

“I think that the idea that financiers would tell companies in the United States not to increase production and to buy back shares and to increase dividends when profits are at all-time highs is outrageous.  It is not only un-American, it is so unfair to the American public.

You want to pay dividends, pay dividends.  You want to pay shareholders, pay shareholders.  You want to get bonuses, do that, too.  You could do all that and still invest more.  We are asking you to increase production and seize the moment. …

Thoughts of One and a Half Dozen of the Other*

It’s getting hard to write longer posts these days, so here are some short thoughts that I wish I could develop further but haven’t been able to get to:

• Re Ukraine: Joe Biden is doing a pretty good job, certainly better than either of his predecessors (especially Barack Obama, who wouldn’t even sell antitank weapons to Ukraine after Russia annexed Crimea and invaded Donbas in 2014).  But President Biden could be doing better.  We need to sell/give the Ukrainians more weapons and more powerful weapons.  The best, and quickest, way to end the war is for Ukraine to win.  Let’s help them do it – now.

• Given all the weapons we are shipping to Ukraine, we need to replenish, and build up, our own inventories.  That means spending more money on defense – and committing to do it for an extended period of time.

Building LNG Terminals; Counting Votes: Germany vs United States

The Financial Times reported today that Germany has completed the construction of an LNG import terminal in Wilhelmshaven (on the North Sea in northwest Germany) in 200 days.¹  The terminal, along with another in Brunsbüttel, which is to be completed by the end of the year, will facilitate the importation of LNG this winter to replace Russian gas. 

Getting this done is little month than six months is amazing.  One wonders how long it would take in the United States.  Probably years, if it could be done at all.  In the United States, 200 days would probably wouldn’t get you through the first round of pleadings and objections in the first of many lawsuits, let along getting a permit or even starting construction. 

Covid-19. Ukraine. Do We Ever Learn Anything?

When Covid-19, then known as the coronavirus, hit in early 2020, we weren’t ready.  We didn’t have enough personal protective equipment, our medical systems were inadequate, the plans we had for pandemics didn’t work, etc.  Things were a mess.  On April 26, 2020, I wrote a long post entitled “Preparing for the ‘Next’ Coronavirus – Whatever It Is. But Will We?”  But the post was not talking about just the next virus.  It was asking about the next emergency, the next disaster, the next big problem, whatever it was.  In the conclusion of my post, I said this:

“Robustness.  Resiliency.  Nimbleness.  These are what we need if we are to be ready for the emergencies and disasters that will happen, though we don’t know which ones or when.  Most of all, however, we need leaders who understand the importance of these qualities and who can provide the leadership to help us secure them and maintain them.”

Here’s My Theory Why Self-Driving Cars Are a Long Way Off: Lawsuits

On Monday, the Financial Times had an article noting that driverless cars may create more traffic jams because more people will take cars if they don’t have to drive themselves.  But, the article also noted that “[p]redictions for driverless cars hitting the road en masse have repeatedly been proved wrong.”  The FT published my letter giving my theory why in Friday’s paper.  Here it is (there is no link because it is behind their paywall):

“Lex talks about how driverless cars may result in more cars on the road as people find car travel even easier if they don’t have to drive themselves.  (‘Driverless cars: jam tomorrow’, March 7)  But the article also notes that, ‘[a]fter a decade of hype and hundreds of millions of dollars of investment, you still can’t buy a self-driving car.’  As the article concludes, ‘[t]he future [of driverless cars] may also be further away that investors hope.’

Biden Is Looking for Oil Everywhere – Except Texas

The Biden administration energy policy reminds me a lot of Johnny Lee’s 1980 hit country song “Looking for Love (In All the Wrong Places)”, except it should be changed to “Looking for Oil in All the Wrong Places.”  With, first, inflation surging and, now, Russia invading Ukraine, the Biden administration is looking for oil.  Except it is looking in the wrong places.

Late last year, with gas prices up, the Administration asked Saudi Arabia and the Gulf states to increase oil production.  They wouldn’t.  According to some reports, one of the reasons the Administration is pushing to reinstate the Iran nuclear agreement is to get Iranian oil back on the world market.  The New York Times has reported that Administration officials are talking with Venezuela on ways to end on sanctions on their oil, to get supplies up and gas prices down.

Economic Illiteracy At the Top (Still)

It looks like the Biden administration has found a way to cut oil prices: Come up with a new Covid-19 variant.  More seriously, President Biden said, in addition to just about begging OPEC+ for more production (it’s not a good look for a U.S. president to be publicly asking Saudi Arabia and Russia for, in effect, political help¹), and this gets to the point of this post, that the problem of high oil prices was “because oil supply has not kept up with demand as the global economy emerges from the pandemic.”² 

Except that is wrong.  It’s not that supply is lower than demand.  Supply and demand will always meet³; it’s just that some people may not like where they meet.  Supply might not be high enough for supply and demand to meet at a price people want to pay, but that doesn’t mean they won’t meet.

Electric Cars, Ice Storms, and the Grid

I was driving home from Lincoln, Nebraska, last weekend.  (We were there to meet a beautiful new granddaughter.)  As I drove back, I remembered another drive back from Nebraska.  It was in 2006 or 2007.  This time we were in Omaha, visiting our son who was going to Creighton University.  We drove home the day after a massive snow/ice storm hit Iowa.  As we were driving on I-80 across Iowa, we saw the effects of the storm: piles of snow, semis in the ditch, etc.  It was sort of scary, except we were a day after the storm, so the roads were clear, and it didn’t affect our driving.  

The only real problem for us was that electricity was out all along I-80, and we were starting to run low on gas.  (Note to self: In the winter {or spring or fall}, don’t let your gas tank get too low.  You never know when stations might be closed.)  Fortunately, we finally found a gas station that was open: It had a generator, so it had electricity and its gas pumps worked.  To say we were happy – and relieved – is an understatement.

Cutting Carbon Now

New York is shutting down the Indian Point nuclear power plant, which in the past has supplied upwards of 25% of the electricity for New York City and Westchester County.  So where is the electricity going to come from, especially since New York Governor Andrew Cuomo has blocked the construction of pipelines that would bring natural gas to New York City?  Governor Cuomo has proposed building 9,000 megawatts of offshore wind power and a 250-mile transmission line from upstate New York to bring in renewable energy, but they aren’t ready yet - obviously.  Also, given the opposition there will be to such proposals, who knows when they will be built, if ever.  After all, the Biden administration has already withdrawn proposals for offshore wind power developments off certain parts of Long Island because ….  Well, there are always good reasons for not building such things in one’s own backyard.  (Here.)

But, don’t worry about power blackouts in New York because, even if there is a shortage of natural gas, gas-powered plants can switch to oil.  Huh?  We’re trying to cut carbon emissions, so the solution is to: (i) shut down an existing nuclear plant, which supplies, by definition, at least once it is built, carbon-free power; (ii) block natural gas pipelines because natural gas emits carbon and we want to be carbon-zero; and (iii) use oil, the most carbon-intensive of all three, as the back-up power source until we can get wind farms and transmission lines for renewable energy built.