Writing about energy developments used to be fun and rewarding. It’s such a critical, complex, fascinating business that touches everything, and is everything we touch. No one understands all of it, not that I’ve ever met anyway. To write anything illuminating about energy required immersion in the energy world – the technical end, the geopolitical end, the marketing end, the production end, and on and on. It used to be a fascinating river to stand in the middle of, learning from the endless flow of exciting energy happenings.
And the interesting aspect is ramping up wildly. That flow of exciting energy developments is multiplying rapidly, and no one understands these new angles either. Given that the world demands the best of the old system along with a wish for an entirely new one, you’d think it would be the best time in history to be part of the energy scene.
So how come writing about energy these days feels like being the low guy on the totem pole at the sewage treatment plant, the sap that has to go into the bowels of the system and deal with the big ball of crud everyone flushes but isn’t supposed to?
Maybe it’s headlines like this: Turning to garbage dumps to survive, Argentines feel the pain of 100% inflation. Or this one: Diesel hits Chaos Mode in Fresh Blow for Global Economy, about a looming global diesel shortage. Or this one, documenting protests due to rising food/energy prices: 101 countries witness rise in civil unrest in last quarter. Or this one: Pakistan energy shortage could last years, blackouts expected this year. If you need help understanding what that one’s about, you must be…
…A politician.
Sorry, don’t mean to go there – the last thing I want to do is get into political “debate”. I’d rather play with the sewage ball, thanks.
Unfortunately politics can’t be avoided, because those people we’ve put x’s beside the names of are making some very bad decisions. Actually it’s a little more nuanced than that; the writhing pit of vipers one level below the elected, the appointees and lobbyists and gatekeepers and Rasputins, are the ones whispering in well-groomed voted-in ears, and they’re sending the world into a tailspin like a pig would when flying into a jet engine.
In part because I’m as pathetically ethnocentric as anyone else, and in part because it’s the heart of the problem, I’ll start with big North American examples. The current US administration has appointed no oil or gas representation in senior ranks of the Department of Energy, pretty much anything but. To drive home the point, the White House put out a major strategy document a few days ago. The tone of it is clear (with respect to energy, anyway); climate change is mentioned 20 times in the 48 page document (despite the fact that the document is called “NATIONAL SECURITY STRATEGY”) including these very first sentences: “Our Enduring Vision We are now in the early years of a decisive decade for America and the world. The terms of geopolitical competition between the major powers will be set. The window of opportunity to deal with shared threats, like climate change, will narrow drastically.”
As is evident around the world, energy security is foremost in every serious person’s minds. It is also obvious that for the next few decades at an absolute minimum, that means hydrocarbons/fossil fuels.
But the US NATIONAL SECURITY STRATEGY mentions “fossil fuels” only three times. One mention is about “an ambitious plan to reduce Europe’s dependence on Russian fossil fuels”, and the other two are simply staggering from a national security perspective: “Events like Russia’s war of aggression against Ukraine have made clear the urgent need to accelerate the transition away from fossil fuels. And: “Our technology strategy will enable the United States and like-minded democracies to work together to pioneer new medicines that can cure diseases,, increase the production of healthy foods that are sustainably grown, diversify and strengthen our manufacturing supply chains, and secure energy without reliance on fossil fuels.”
NATIONAL SECURITY STRATEGY? What? In the past few months, the US administration has looked towards Saudi Arabia, Iran, and Venezuela for increased oil production (“The Biden administration is preparing to scale down sanctions on Venezuela’s authoritarian regime to allow Chevron Corp. to resume pumping oil there,” according to a Wall Street Journal article).
Biden has berated Saudi Arabia for cutting oil production, pressured them to increase more, and maintained an attitude of indifference to the health of his home industry. How does that fit into a National Security Strategy, particularly when at the same time the administration is pounding US producers for, as a US government website puts it, “the fossil fuel industry’s long-running campaign to spread disinformation about climate change and greenwash its role in causing global warming.” (At another congressional hearing, the administration went after banks for financing hydrocarbons, and when Jamie Dimon, head of J.P. Morgan, was asked if his band would refuse to make new investments in oil and gas, he answered, “Absolutely not, and that would be the road to hell for America.” The congressional panel then informed him that he “obviously didn’t care about working class people in front line communities that are suffering…cancer rates are so high…[financing oil and gas means] defies all logic and scientific evidence…if your financial institutions aren’t going to follow through on net zero commitments then regulators including the federal reserve and congress must step in and make them.”)
Closer to home, the administration has continued to make life difficult for US producers (either explicitly like messing with oil/gas leasing rights, or more indirectly by repeating the mantra “the urgent need to accelerate the transition away from fossil fuels”). Biden also made a big show of sticking a thumb in Canada’s energy eye on the first day in office, vetoing the Keystone XL pipeline which would have supplied much of the oil he seeks so desperately.
Canada is no better. After Germany came begging for gas, Prime Minister Trudeau sent representatives home with no LNG, no promise of LNG (there “has never been a strong business case” for east coast Canadian LNG Trudeau said, an Ottawa-bred-and-born ‘fact’ which came as news to Canada’s entire natural gas industry), and only a pledge to deliver to Germany green hydrogen someday – 2025 Trudeau said, with the rest of the world pegging the date at somewhere between 2030 and never (Germany could produce in their own backyard just as easily without the massive transportation headaches).
Recall also that Germany’s energy crisis is happening now, and it takes a special breed of trust fund baby to offer such a baffling cast-iron life-vest as mythical green hydrogen to a ‘valued partner’. German representatives smeared a pseudo-happy grin on their face to show their solidarity with a fellow climate-warrior, then within a month signed a 20-year LNG supply deal with…Mexico. That deal translates from German as “&%$#@ you, Canada.”
Due to backlash from this German begging debacle, Canadian Finance Minister Chrystia Freeland hit the stage and said some stuff that actually wasn’t crazy, like “LNG is an important transition fuel.” But then she threw in nuggets like “We will always be looking at economically viable LNG projects.” Oh really. What pray tell does the government have to do with assessing the “economic viability” of LNG projects? She makes it sound like the government is helping steer crucial projects that are economic but just need a little help.
Meanwhile in the governmental underground, nefarious anti-hydrocarbon schemes are being furtively assembled with the cagey cunning of a hundred street rats. One example was brought to light by ResourceWorks, a Vancouver based responsible natural resource development not-for-profit, who flagged (thanks) a new “public consultation”: The feds issued “Draft guidance for best-in-class GHG emissions performance by oil and gas projects”. The draft guidance explains how a project should identify the relevant best-in-class emissions performance globally, then explain how the proposed project will achieve best in class performance (or how it will get there), and then demonstrate how the project is consistent with the overall transition to a low carbon-economy and net-zero scenario.
Oooohh, you might think, the feds are going to be keeping an eye on any big project. Well, not so fast – this kangaroo court will preside over the following: exploration; offshore oil and natural gas production; onshore oil and natural gas production; pipelines; oil refineries, including heavy oil upgraders; natural gas processing; and LNG.
Please note the inclusion of “onshore oil and natural gas production.” This means the feds will be seeking veto power over any oil and natural gas production, which could mean anything, including a singular well.
Fans of this sort of governance will cry foul at that accusation, because the consultation states that this will only apply to oil and gas projects “that are subject to a federal impact assessment under the Impact Assessment Act (IAA).” So, let’s head over to the IAA and see what can fall in this bucket. Surprise surprise. From the IAA: “9 (1) The Minister may, on request or on his or her own initiative, by order, designate a physical activity that is not prescribed by regulations made under paragraph 109(b) if, in his or her opinion, either the carrying out of that physical activity may cause adverse effects within federal jurisdiction.”
Please clearly understand what this draft guidance allows. A Minister may deem a physical activity subject to these global best-in-class and net-zero compliant regulations if The Minister, on his or her own initiative, is of the opinion that the activity may cause adverse effects within federal legislation.
This is banana republic talk. A minister may be of an opinion not just as to a matter of law but as to whether may cause “adverse effects”. A minister’s opinion about potential adverse effects could, according to this draft guidance, call a halt to any “onshore oil and gas production” they feel like. And come to think of it, why is there such specific planning only for oil and gas developments? Well, that’s an easy one – just look at who makes up the ranks of senior energy staff.
Both nations’ leaders have surrounded themselves with “energy experts” that have no experience with the dominant energy system, but even worse, with people that openly despise it. Both Canada and the US have fanatic moles planted in the upper ranks of their administrations, and the danger is palpable. Actually, that description is unfair to moles – a mole in the traditional sense is one that snuck in covertly, without discovery. The US and Canada have chosen human poison to add to the well. The US climate czar is Gina McCarthy, former CEO of the Natural Resource Defence Council (NRDC), a climate activist hive of lawyers that has used every judicial trick in the book to blockade any hydrocarbon development whatsoever across the US (among many others, NRDC has been successful in blocking the Mountain Valley Pipeline for years, the last big pipeline on the books that will enable further Marcellus/Appalachia growth, gas that could find its way to the coast and help the world survive). In Canada, we have former Greenpeace activist Steven Guilbeault, who was once arrested for scaling the CN Tower in Toronto to post Greenpeace climate messaging, and he is honest enough to admit that he is still a “climate activist”.
What are the odds that people like those two might possibly find something “adverse to net zero 2050” in any oil and gas activity? And, in Canada at least, these lords of climate will have potential veto power on – anything. The US won’t be far behind.
People need to understand what is at stake here. Activists are throttling our hydrocarbon industry out of existence, either overtly, or by omission as they allow wave after wave of anti-oil assaults to take place unhindered. Canadian and US leaders are prepared to farm out the world’s need for hydrocarbons to other jurisdictions in the world in order to look clean themselves, just as getting China to make all our consumer crap and sweeping the emissions under the rug makes us feel better about not creating that environmental degradation here.
But the miscalculation of these leaders is profound. Farming out manufacture of cheap tee shirts and TVs and light bulbs to China is one thing; handing control of energy supplies to others is quite another. Did Russia not teach these people anything?
To be clear, some sizeable portion of this nonsense is self inflicted. For a dozen years I’ve been stunned by a billion dollars worth of executive comp and bonuses and stock options and perfect haircuts and expensive suits failing to even put up a decent effort to not just justify the industry’s existence but to explain how critical hydrocarbons are. US oil execs, mostly the Big Oil stripe, have this year refused to appear before US congressional hearings. I understand those people aren’t fun to talk to, but…isn’t that kind of your job? Aren’t you paid a hell of a lot of money to fight for, if not your own reputation, at least your business? And if you can’t defend your own industry, who on earth will? Alex Epstein has done a hundred times more in a decade than the entire petroleum industry has in 50 years. And he’s from California!
But anyway. Panic gets us no where. Time for a deep breath.
It’s a very complicated world, and it is teetering wildly like an imbalanced spinning top. We’ve gone from a billion people on earth to 8 billion in less than two centuries, and somehow have cobbled together a system that feeds, heats and clothes them remarkably well. Not all of course, but most. We walk around staring at devices in our hands that have more power than what put people on the moon 50 years ago, and those devices are accessible across the globe. We all love to eat and run around the globe like kids in a playground. We are kind of pigs when given half a chance; we need some lessons in/reminders of efficiency and how precious natural resources really are.
It’s not easy figuring out how to make this all work sustainably when 7 billion all want to live like the rich billion. But throwing out the furnace just before winter starts is not part of the solution.
Try to find the signal in the noise and hopefully we’ll get through this energy crunch with a lot more respect for what we currently don’t. Be good to one another. Well, except for bad leaders – may they all torment each other in their dreams like the sewer balls they so remarkably resemble.
The energy transition will happen – but it won’t look like what’s being forced on us. We will rethink “environmentalism” in completely different and better terms. Read about that in “The End of Fossil Fuel Insanity” at Amazon.ca, Indigo.ca, or Amazon.com. Thanks for the support. And hang in there Ukraine! The world is cheering you on.
Read more insightful analysis from Terry Etam here, or email Terry here.