Crude oil
CL00,
+0.62%,
gasoline
RB00,
+1.20%,
and natural-gas
NG00,
-1.55%
prices soared after Russia’s invasion of Ukraine. Gasoline prices in particular reached their highest nominal level since the summer of 2008.
That invasion, and the subsequent U.S. ban on oil imports from Russia, are partly responsible, but they aren’t the only reason. According to the U.S. Energy Information Administration, the impact of the war in Ukraine occurred “against a backdrop of low oil inventory and persistent upward oil price pressures.”
“ Ramping up production quickly enough to lower prices in the U.S. and meet the needs of Europe is impossible. ”
A terrible idea
Predictably, the oil and gas industry has used the crisis to call for more oil and gas drilling leases on public lands and offshore—and more oil and gas exports to Europe and elsewhere.
That’s a terrible idea, and the Biden administration must reject it.
What the industry doesn’t say publicly is that ramping up production quickly enough to lower prices in the U.S. and meet the needs of Europe is impossible. To take just one example, the liquefied natural gas (LNG) export terminal in Freeport, Texas, took about nine years to get from permit application to operation.
Worse still, the idea that we can increase production and exports to address the current crisis, and then start reducing them again to meet climate targets, is an absurdity. The industry is selling a “solution” that won’t work—and will endanger all of us for its own benefit.
The sizable number of proposed LNG export terminals at various stages of their permitting process will take a while to be built—if they survive legal challenges to their permits. Even if the industry gets its wishes, the war in Ukraine could well be over by the time any of the increased production gets to market.
By then, oil and gas prices will already be trending downward. In fact, crude oil prices are already trending down from their March 8 high, and it’s only a matter of time before gasoline prices catch up.
Gas prices fall for first time in 12 weeks, but expert says decline may be short-lived
Carbon lock-in
More important, building more long-term oil and gas infrastructure such as pipelines, refineries, and export terminals to address a short-term geopolitical crisis today will lock us into more oil and gas production for decades to come. Once significant capital investments are made in facilities to produce, transport, process, and use fossil fuels, it’s harder to phase out these facilities before the investors obtain the desired return on their investments.
This phenomenon, known as carbon lock-in, is a compelling reason to halt all new fossil-fuel development, something even the generally pro-fossil fuel International Energy Agency (IEA) acknowledges.
Just weeks ago, the Intergovernmental Panel on Climate Change (IPCC), a global scientific body, released its climate adaptation report. The report was unequivocal: “climate resilient development prospects are increasingly limited if current greenhouse gas emissions do not rapidly decline.”
Climate change happening faster than globe can adapt, latest U.N. report warns
Given all this, indulging the oil-and-gas industry’s egregiously self-serving push for more production would be out of touch with reality.
Besides the global impact of greenhouse-gas emissions, there are localized impacts of fossil fuels, such as toxic air and water pollution. In the U.S., these impacts are disproportionately borne by indigenous, Black, brown, and low-income communities of all races. Expanding production means turning more communities into sacrifice zones.
Redlining legacy still devastates neighborhoods—but this particular harm comes from pollution
If the Biden administration means what it says about bringing environmental justice to the “places that have suffered the most from persistent pollution,” it shouldn’t give in to industry pressure.
Long-term solutions
But what can we do to address high gas prices?
The only viable, long-term solution is to jump-start the long-overdue transition away from fossil fuel dependence. As an immediate measure, Congress should pass a windfall profits tax on the oil-and-gas industry and rebate the proceeds to households. Fortunately, there’s proposed legislation doing exactly that. Congress needs to pass this bill with urgency.
And in the very near future, we need an aggressive rollout of truly renewable energy generation capacity such as wind and solar, while avoiding dirty distractions such as biomass combustion and waste incineration. We need meaningful government incentives and assistance to residential and commercial building owners to convert their heating systems to electric heat pumps.
We need emergency investment in mass transit, so transit systems can be extended to serve currently underserved areas, such as the 45% of the U.S. public who have no access to public transportation whatsoever. We need spending to ensure transit service is frequent and reliable, providing a real alternative to personal automobiles.
We also need capital spending to convert transit buses, school buses, postal trucks, and other public fleets to electric vehicles. And we need generous rebates for purchasing new and used electric vehicles.
These measures won’t be cheap, but ending our dependence on an energy source that’s hammering consumers with price volatility—not to mention making the earth uninhabitable—is more than worth it.
Basav Sen directs the Climate Policy Project at the Institute for Policy Studies.
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