Trump’s war thwarts ‘drill, baby, drill’
He boosts renewables
Gordon L. Weil
President Trump is unintentionally remaking energy policy.
Not reckoning with the huge energy impacts from his Iran
War, perhaps because he had no thought it would last long, he has brought deep
and likely permanent changes to America’s energy economy and possibly the world’s. He missed Iran’s ability to quickly use its
key position as an oil exporter in retaliation for the U.S.-Israel attacks.
He learned that Iran could limit or prevent oil exports through
the narrow Strait of Hormuz, causing a large reduction in the amount of oil
available in Europe, Asia and elsewhere.
Iran’s move was the major unintended
consequence of the war.
The president’s answer was to see Hormuz as a naval blockade
that could be overcome by naval force.
Deploy an armada of warships and minesweepers and the major naval powers
could quickly end the blockade.
He did not reckon with Iran’s decision to allow tankers
destined for countries not aligned with the U.S. to pass through the Strait. Now did he count on the effectives of Iran’s
small speedboats to harass and damage larger vessels to the point they would
not seek passage.
More significantly, he learned that European and other
allies would not respond to his request for their help. He seemed to believe that NATO Article 5 meant
they should support the U.S. But NATO is
a defensive alliance, designed to aid member countries that have been attacked.
But the Iran conflict is a war of choice, and NATO members have declined to aid
its instigator.
Desperate for more oil, Trump eased oil market limits placed
on Russia. He placed a new burden on
European allies. His move will give Russia
more to spend on its Ukraine war, and Europe, as Ukraine’s prime backer, would have
to spend more to keep pace.
The effectiveness of Iran’s response has been shown by the record
drawdown of the international community’s petroleum reserves. Intended to help when national supplies were reduced
by wars and similar interruptions, the reserve has become an instrument of war. And the drawdown left major countries less
well defended and more vulnerable.
The Iran war has gone on longer than Trump had anticipated. The longer it goes, the longer it will take
to restore a quasi-normal petroleum market.
Like Trump’s tariffs, it will encourage the creation of new trading
relationships that could continue even after the war ends. The object lesson of the Iran war is for
nations to reduce energy risk.
More U.S. oil production won’t help. As the
world petroleum prices increase, oil companies boost their prices and profits,
though their own costs don’t increase. It
happened immediately, and their initial gain has been estimated at $63 billion. It would be more with a longer war.
Trump’s greatest accomplishment from the Iran war may be his
inadvertent assistance to the development of renewable energy. He has long scorned solar and wind power as being
by-products of “woke” environmental policies.
Yet he is creating the conditions that will make renewables more attractive.
Perhaps the principal complaint against renewables is their
cost. They require new investment in facilities
and in electric transmission lines. The
new facilities add to the already substantial investment by fossil fuel generators,
nuclear power and transmission companies.
Add to the cost the perception that, while oil and natural gas
can flow continuously to existing power plants as needed, the availability of
wind and solar power depends on the weather.
It is less reliable and must be backed up.
If oil supplies are cut and the price of oil almost doubles,
the economics of renewables improve radically.
The cost of redundancy to improve reliability and the development of
large-scale power storage becomes more competitive. In fact, with the price of oil over $100 a
barrel, that point may have been reached.
As the Straits of Hormuz blockage demonstrates, geography
and politics matter. A significant share
of world oil is jeopardized by a conflict remote from the markets that need
that oil, making obvious the case for siting generation closer to markets. Power supply from domestic renewables is more
secure than supply originating abroad or subject to foreign cost-setting.
Wind power from Maine at known costs can become more economically
attractive in New England than natural gas, even from U.S. suppliers, subject
to world market prices. Along the same
lines, increased nuclear generation and the rebirth of hydropower are now
attractive alternatives.
While the federal government has long subsidized and
supported fossil fuels, Trump has given renewables a boost.
Energy prices will increase, as they have, and remain
higher. Reducing pressure on family budgets could
overcome environmental concerns about hydro and nuclear, while recognizing the new
economic competitiveness of renewables.
It’s a trade-off where affordability trumps “drill, baby,
drill.”
No comments:
Post a Comment