Energy security is central to an abundance agenda
The last two years shows why a more pragmatic approach to the energy transition is needed
The past ten days saw much of Washington D.C., particularly those aligned with the Biden administration and Democrats, doing what it does best:
Throw a temper tantrum driven by politics and the anxiety of midterm elections, looming large now less than a month away.
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The proximate cause for this latest round of histrionics was the early October surprise decision by OPEC+, a group of leading oil producing nations that includes Russia and Saudi Arabia, to cut oil production by two million barrels a day. The group said its decision was driven by economics and the threat of a global recession on the horizon, but the Biden team cried foul. Its surrogates – often with other axes to grind against Saudi Arabia, some due to their own neo-Orientalism, many of them justified – took to social media and penned heated shoot-from-the-hip opinion pieces denouncing the move as political and intended to help Republicans win in the midterm elections.
Three ironies loomed above the din of outraged insta-analysis:
1. A strange embrace of “drill, baby, drill” on the left. Some of the voices wailing the loudest that more fossil fuels won’t be produced in the near-term future are the same ones who don’t show much favor towards producing fossil fuels in the first place. Indeed, one of the goals of some advocates for a greener energy future is to raise the cost of fossil fuels in order to make renewable energy more competitive in the overall market, but that angle received little attention in the debate.
2. The not-so-savvy foreign interference in America’s politics. Saudi Arabia has served as a political punching bag in America’s politics for decades now. The timing of this decision, combined with the fact that the move would benefit Russia’s bottom line at a time when its war against Ukraine isn’t going so well, has made Saudi Arabia the target of charges that it was seeking to curry favor with the GOP and sidle up to Vladimir Putin to boot. To counter that last charge, at least in part, Riyadh announced it would donate $400 million in humanitarian aid to Ukraine.
The main irony here is the vociferousness of the political blowback from the left against the kingdom demonstrates that Saudi Arabia may be more oblivious than wily when it comes U.S. domestic politics; the gaps between an absolute monarchy and a federal republic that still has its democracy and freedoms are considerable. Another irony is that higher gas prices at the pump ultimately will draw the ire of Republicans and Democrats alike in the medium term, if in fact oil and gas prices go higher. Nearly two weeks after the OPEC+ decision, global oil prices are actually lower now than they were before the decision, reflecting not only concerns about the global economy but also the complicated nature of what drives oil and gas prices.
3. Remember the slogans about energy security? Next year will mark the 50th anniversary of the original OPEC crisis, when this group of nations targeted countries that supported Israel during the 1973 Arab-Israeli war with an oil embargo. The ten U.S. presidents since have each made impassioned calls for energy security, some come calling for outright “energy independence.”
The biggest irony of this latest episode is that after decades of talk about energy security American politics seemingly remain vulnerable to energy shocks. No one, whether from the left or the right, has been able to put the country on a more stable footing – even as America has become an energy producing superpower during the past decade.
Discussing energy security at the scene of an initial drill
In the midst of the rancor about this OPEC+ decision, I hopped in my electric vehicle and drove from the Washington D.C. area to take part in an energy security conference at the Drake Well Museum and Park in the Oil Region National Heritage Area of northwestern Pennsylvania, site of America’s first oil well drilled by Edwin Drake in 1859.
The driving range of my electric car is about 250-300 miles, which is around the distance from my home to this rural part of Pennsylvania. The make and model of my car benefits from a national network that stretches into many but not all parts of rural America, so the trip required just a little more pre-planning to make sure I was going on a route where I could re-charge the battery.
The Oil Heritage Energy Security Conference, brainchild of fellow native Pennsylvanian and think tank analyst Andrew J. Tabler, brought together a unique mix of participants to reflect on the lessons of the past and present in order to consider pathways towards the future at home and abroad under the title “Back to the Future.”
Working with Brenda Shaffer, an energy expert and professor at the U.S. Naval Postgraduate School, Tabler assembled dozens of people from different walks of life to discuss the current moment in the global energy dynamics and consider what’s ahead.
Energy industry leaders, local government officials, foreign diplomats, and university professors exchanged perspectives as varied as the colors of the fall foliage in the Pennsylvania mountains that served as the backdrop for the conference. The sessions were held under “Chatham House Rules,” which means the participants are free to use the information received only without revealing the identity or affiliation of speakers in order to promote the free flow of discussion.
What was most refreshing about the discussion was that it took people from diverse backgrounds to consider the current moment in global energy markets and wrestle with the challenges the whole world is facing in trying to get the right mix of energy to fuel inclusive economic growth. Instead of the canned, almost programmatic debate that was playing out in official statements and social media posts on the OPEC+ decision, there was more give-and-take in the room.
For me, the discussions highlighted three important lessons about the current energy security moment the world is in right now:
1. The world is at an unprecedented moment in the use of energy policy as a tool in geopolitics. Global energy markets contain a multiplicity of actors working to use energy production and consumption in ways that benefit their countries or their companies’ bottom lines. As the sources of energy expand to new areas and global demand for energy continues to grow, we’re likely to see more instances in which energy policy is used as a tool to shape geopolitics.
This year alone, we’ve seen Russia try to use the leverage of its oil and gas resources to weaken the will of European countries in the Ukraine war. Energy sanctions also remain a key tool of U.S. foreign policy in places like Iran and Venezuela. The various vectors for energy policy competition are likely to grow in the coming years.
2. The United States lacks a coherent national and international energy policy. Despite the fact that America has become a leading producer of energy in recent years, its muscle memory seems stuck in the past with a strong focus as a large energy consuming nation. This autopilot mode often puts America in a supplicant mindset, as witnessed in the current furor over the OPEC+ decision, and this mentality inhibits America’s ability to strengthen its overall energy security and look for ways to deploy its unique role in global energy markets in more proactive, mutually beneficial ways that help Americans as well as its partners overseas.
The reasons for America’s incoherence on energy strategy are in large part a function of how the country’s political economy is structured and how that gives it certain advantages and disadvantages over others in the world. Unlike other leading energy producers, America has no national energy companies, and the free hand of the market and relative openness of America’s economic system gives the private sector wider berth and more of an independent role to shape policy than exists in countries that have large state-owned or controlled sectors.
3. The global energy transition will require greater investment in a wider range of energy sources and more time than some people assume. One key lesson from the last few years: trying to stop or dissuade investment in fossil fuels in order to force innovation and a massive restructuring of America’s energy system and overall economy is likely to backfire politically and stall progress towards the goals. America needs to take steps to facilitate the energy transition in order to respond to the increasing threats posed by climate change for sure, but if it does so in a way that hurts working Americans, it could end up stalling the transition.
America’s lack of preparedness on the energy security front is a bipartisan failure – both of the major political parties share a responsibility for not building a strong enough consensus at home to defend Americans from energy shocks. The most recent energy price hikes are driven by a multiplicity of factors: a sharp increase in demand after jumpstarting the global economy following Covid shutdowns, inflation due to Russia’s war against Ukraine, supply chain challenges impacting a range of industries, insufficient investment in a wide range of production of energy resources, and bad regulatory policy that has inhibited growth in nuclear energy as well as permit reforms that would enable solar and wind farms to connect to transmission lines needed to move the power they generate.
But to deal with this complicated moment, we need a multifaceted approach to energy, one most definitely not reflected in the recent debate about OPEC+ decision that mostly focused on the short-term.
Reliable and abundant supplies needed to build political support for the energy transition
To chart a long-term path towards energy security, we need to put America’s efforts in the context of what my colleague Ruy Teixeira and others have called an abundance agenda when it comes to energy policy.
The recent push for renewable energy, combined with other factors that have emerged in the world, has had a negative effect on the reliability and price of energy overall, and this has produced a political backlash of its own. Working Americans have seen a sharp run-up in energy prices, and this reduces the political support that is ultimately needed to move more smoothly forward in an energy transition.
Instead of the false choice of “either/or” when it comes to energy supplies and the question of renewable energy and fossil fuels, we need “both/and.” Without bringing people along in this energy transition and demonstrating that their lives will be better off in all ways, there won’t be enough political support to make the changes needed.
The United States has an opportunity to increase its energy security by expanding and diversifying the sources of energy it uses to fuel its prosperity, but it needs to build political support among a wider group of Americans to make this transition successful.
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