First oil

Here we are, at the end of another wild 12 months for the global oil market. The oil price has been up, down and sideways, remaining highly unpredictable and subject to the fears and whims of traders. Meanwhile, we have the added distraction of some countries rushing headlong into full adoption of renewables while running away from oil and gas, adding further to market volatility.

What we haven’t seen is a dependable replacement for oil and gas reliability. Plenty of people want to rely on electricity for the future, yet the world has trouble now, trying to generate enough electricity to meet current demands, much less anything greater down the line. And nowhere does the oil and gas industry get sufficient credit for its immense efforts to cleanly produce its products and contribute to a healthier climate. We all want a better climate, but industry efforts seem to be ignored.

Accordingly, we’ve seen officials in some governments breathlessly embracing renewables in the name of climate, as they drive relentlessly toward replacing oil and gas with everything electrical. They seem to have forgotten that something has to be used to generate the electricity in the first place. To replace all the energy demand that oil and gas meet, are governments going to put windmills on every mountain ridge and solar panels across every acre of desert? Ironically, environmentalists used to complain that oil and gas fields were eyesores, but what is uglier than a row of windmills perched on top of a mountain range?

Additionally, how many more rivers must be dammed up for hydroelectricity? Hydrogen could be a big help, although it is a bit volatile and expensive at the moment. And one thing that governments are not telling their citizens is how much their energy bills will go up in future years, but it will be substantial. Residents in the U.S. already complain about gasoline prices, which are still not as high as their peak in 2008.

So, there are real questions with the functional reliability and economic stability of renewables and alternatives. And, if there’s one thing that people in the U.S—and probably folks in other countries—crave, is reliability of energy supplies. People in the U.S. are tired of inflation, supply chain problems, rampant crime, the endless Covid cycles, and last, but certainly not least, suddenly expensive and frustratingly undependable energy supplies. People want stability and reliability, and they’re not getting it from the current administration in Washington, D.C. This pattern seems to be repeating itself in many countries.

Finally, the recent spate of tornadoes across the mid-U.S. brought home another future problem, which no one talks about—the reliability of electrically powered vehicles in periods of bad weather, when local electrical infrastructure is torn down by tornadoes, straight line winds or hurricanes. So, if all the local first responder vehicles are powered electrically, where are they going to go, to charge up, if all the infrastructure is ripped up?  Are they going to abandon their search-and-rescue efforts after storms run through, because they’re running low on stored power and need to drive 35 miles away to where charging stations might be functioning? Officials need to answer these questions, and many more, before they stick their citizens with permanently higher, inflationary energy bills.

Meanwhile, the state treasurers of 16 states in the U.S., led by West Virginia State Treasurer Riley Moore, signed and sent a letter on Nov. 22 to financial institutions across the country that do business with their states. This letter said that the states will take “collective” and perhaps punitive action against any financial institutions that do business with these states yet engage in the “ongoing and growing economic boycott of traditional energy production industries.” Moore’s letter said that the overarching objective is to “protect our states’ economies, jobs, and energy independence from these unwarranted attacks on our critical industries.” We highly applaud this collective action by these 16 states and wish them well in their enforcement.

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com