“Longer, more frequent outages afflict the U.S. power grid as states fail to prepare for climate change.”
– The Washington Post

The demand for coal, natural gas and oil now exceeds pre-COVID 19 levels. Government stimulus spending has accelerated the recovery of demand, causing producers of gas, coal, and, to a lesser extent, oil being caught flat-footed. On Nov. 2, Bloomberg reported that global oil demand exceeded the key level of 100 million barrels per day.

On a global basis, consumers are experiencing natural gas shortages and higher prices for gas, coal and oil. Oil inventories are 94%, and European gas storage is 86% of its usual levels. Over the past 12 months, the prices of natural gas (LNG) and oil have more than doubled.

On Nov. 4, Reuters reported OPEC and its allies will stick to their original plan to raise oil output by 400,000 barrels per day. They rejected pleas by President Biden to pump more oil to help cool red-hot energy prices. OPEC and its allies highlighted that the developing nations are cutting back their fossil fuel production.

Fossil fuels currently account for 79% of U.S. energy consumption. Nuclear power drives 42% of renewable energy consumption. We need to acknowledge these disturbing facts:

  • The world still needs fossil fuels to meet our energy needs because the transition to clean energy from fossil fuels is not occurring fast enough. It will require doubling capital spending on energy to at least $4 trillion a year.
  • The U.S. emitted 5.3 billion metric tons of carbon dioxide in 2018, making up 15% of the world’s emissions.
  • Many countries have net-zero pledges but no plan on how to get there.

The Economist magazine highlighted that globally, the investment is only 50% of the level required to meet the ambitious goal to reach net zero carbon emissions by 2050. They state, “Without rapid reforms, there will be energy crises and, perhaps, a popular revolt against climate policies. At a minimum, the cost will be higher inflation and slower growth.”

According to Bernstein, a leading research firm, the global shortfall of natural gas could rise from 2% to 14% of demand by 2030.

For a variety of reasons, investments in fossil fuels have slumped by 40% since 2015. In June, institutional investors, such as State Street and BlackRock, supported the election of three “climate focused” investors to a nine member Exxon Board of Directors. Nearly 61% of Chevron shareholders voted earlier this year to support a proposal that the company substantially reduce emissions from its products. A Dutch court ruled that Royal Dutch Shell needs to cut its emissions to align with the Paris agreement. The bottom line is that the major oil companies will invest significantly less in new exploration. Rather, they will use much of their cash flow to buy back stock and increase dividends.

The Economist forecast that the consequence of “rich democracies” quitting fossil-fuel production is to increase the share of oil output from OPEC plus Russia from 46% today to at least 50% by 2030. Russia provides 41% of Europe’s gas imports. Its leverage will grow when it opens the Nord Stream, which is a natural gas pipeline through the Baltic Sea to the European Union.

There is an old but apt expression: “You never miss the water until the well runs dry.” Balancing our need to confront global warming requires a realistic appraisal of our ongoing energy needs. We must take extraordinary efforts to develop clean, renewable energy to counterbalance the decline in energy consumption from fossil fuels. None of us wants to return to the 1970s, which witnessed long lines waiting for gasoline, high prices and fisticuffs.

Originally published in the Sarasota Herald-Tribune