Recently, President Donald Trump spent a great deal of time and effort to get OPEC and Russia to cut their oil production in order to prop up the flailing U.S. oil and gas industry. The British publication The Economist noted efforts to raise oil prices and therefore gasoline prices is behavior commonly observed in Caracas, Venezuela, and Moscow, Russia. It is very unusual behavior for an American president, especially in an election year.
Why the president feels it necessary to bolster the U.S. oil industry is actually an argument in favor of Gov. Tim Walz’s efforts to promote electric vehicles in Minnesota.
The U.S. oil and gas industry’s short-term problem stems from the deep decline in oil consumption due to the coronavirus. There is simply too much production, not enough places to store it for later, and a physical aspect of oil wells that means you can’t just turn them off for a while and restart them later without permanently lowering production.
The long-term problem is that the Saudis and Russians can produce oil for only several dollars a barrel. That’s long gone in the U.S. and Canada. To be profitable, U.S. and Canadian producers need something on the order of $70 per barrel to make a decent return on investment. OPEC and Russia have restricted their own production and have thus given price support to U.S. shale oil producers for years. With declining sales, their patience is wearing thin, and a ruthless culling of producers is coming.
It’s hard to remember now, but just a few months ago, Trump administration officials were bragging how fracking had unleashed so much oil and natural gas that America now had “energy dominance.” Now we see just how empty that boast really was.
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Further, oil prices will likely stay low. The telecommuting that the pandemic brought about is unlikely to completely disappear, and General Motors can now move an electric vehicle 300 miles on a charge with the groundbreakingly inexpensive Ultium battery.
There is a lesson to be learned here from the coal industry. Twelve years ago, both the George W. Bush and Barack Obama administrations poured billions of dollars into the coal industry to save it and clean it up. It was all for naught. Once dominant, coal will permanently slip below renewable sources this year for the first time, simply because of the economics.
We are now at the same tipping point with the oil and natural gas industry. Tragically, however, the Trump administration is spending billions of dollars from the cynically misnamed “Main Street Loan Program” to prop up this doomed industry.
From a jobs perspective, this is a huge loss. For the same amount of money, renewable energy produces 3.5 jobs for every fossil-fuel job; yet fossil fuels are getting bailed out.
Worse, if we fail to move decisively to electrify our transportation sector, we will become increasingly dependent upon OPEC’s autocrats. After all, the true center of energy dominance is the Middle East and Russia. For national security reasons alone, therefore, electrification of transportation must be prioritized. The importance of this point cannot b e overemphasized. Troop trains roll and anchors are weighed over oil supplies.
For us, dirty energy dominance is no longer an option, much less a desirable one. Energy independence with a vehicle fleet powered by clean, American, renewable electricity, however, is achievable and very desirable. With national leadership absent or misdirected, Gov. Walz is absolutely correct to push forward with the Clean Car Rule and give Minnesotans vehicle choices that both clean up the air and an avoidable national security problem.
Dr. Eric Enberg practices family medicine in West Duluth and is group leader for the Duluth Citizens' Climate Lobby (https://citizensclimatelobby.org). He also is a member of the Duluth Climate and Environment Network.
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