Government, Energy Companies, US Politicians, and Oil Execs See Divergent Opportunity in Ukraine's Crisis

Government, Energy Companies, US Politicians, and Oil Execs See Divergent Opportunity in Ukraine's Crisis

Russia's invasion of Ukraine has made the geopolitical power of fossil fuel energy for autocrats like Vladimir Putin more tangibly apparent than ever. Western elected leaders and energy companies are already lining up to define what Putin's invasion may mean for a clean energy transformation or an "all of the above" strategy that actually increases short- and medium-term production of fossil fuels from the West and its allies. JPMorgan estimates crude oil could surge to $185 per barrel if Russian oil is cut off from the rest of the world.

IEA: A 10-Point Plan to Reduce the European Union's Reliance on Russian Natural Gas, March 3, 2022.

Yahoo Finance: Russia-Ukraine war 'will accelerate' move to green hydrogen, renewable energy (Plug Power CEO), March 3, 2022.

Why This Matters

Winston Churchill once said, "never let a good crisis go to waste." It's with this same sentiment, many are hoping that this crisis accelerates the buildout of green energy in the United States and Europe.

For example, most Russian gas that flows into Germany goes into home heating. Instead of replacing it with fracked US gas, Germany could build out green energy sources like wind and solar to power its grid and ramp up production and installation of electric-powered heat pumps, which are as effective as gas-powered furnaces but use less energy. Germany could also reverse course its phasing out of nuclear energy, and instead go in a direction modeled by France. Many are invoking a "wartime mobilization" to build heat pumps and weatherize buildings to make them more energy efficient.

Reuters: Surging oil prices renew focus on clean energy stocks, March 3, 2022.

WW0: Unlikely Allies, October 20, 2020.

Predictable Cries From Big Oil

The American Petroleum Institute was quick to appeal to their familiar wish list that the Biden Administration: reverse restrictions on permits for fossil fuel production on federal land; reopen offshore drilling; "accelerate energy infrastructure permitting"; and "reduce legal and regulatory uncertainty."

Many on the right are calling on the stalled Keystone XL pipeline, designed to move oil from Canada's tar sands to the Gulf of Mexico for processing and export, and ports that can send liquified natural gas fracked in the US to overseas markets.

CNBC: Sen. Ted Cruz weighs in on Biden's response to Russia, Ukraine, US oil production, March 8, 2022.

Climate Town: US Oil & Gas Companies Trying To Profit From War In Ukraine, March 9, 2022.

Cost Consciousness

The political impact of domestic energy costs has shaped US foreign and national security policy for decades. The "gas lines" associated with the Iran Hostage Crisis or Operation Desert Storm are searing memories for many Americans. The Biden Administration has worked to keep energy prices low throughout 14 months in office, knowing how sensitive consumers are to the prices they pay at the pump and to heat their homes, especially after the shale gas revolution created an expectation of perpetually low prices. A day after announcing the US would not allow Russian oil imports, the Biden Administration is making a pivot, even if European countries draw the line at joining us.

Washington Post: Why high gas prices may be here to stay, March 9, 2022.