The United States is experiencing an unprecedented oil and natural gas rush, but this rush is less about finding untapped reserves of these fossil fuels and more about getting those commodities to market before any more of its leaky bottom falls out. Overproduction because of fracking has contributed to a collapse in the price of a barrel of oil, which hit a low of $26 in February.
That barrel price has nearly doubled since then, but the relief came too late for nearly 200 U.S. oil and gas producers that filed for bankruptcy in 2015 and 2016, leaving a good number of banks and bondholders holding the bag on $120 billion in debt. There may be more failures to come. Sinking new wells and building the transmission lines that radiate away from them toward your home heating or electric system costs a lot of money, and that dough is often borrowed. Many fossil fuel companies remain heavily leveraged, and U.S. banks will be worried about getting those loans paid off.
That means perhaps the most politically powerful forces in the nation will be seeking to bend federal policy toward an unacknowledged bailout of fossil fuel players struggling with overproduction. That process began with the lifting of a 40-year-old oil export ban in December 2015 and the loosening of similar restrictions on natural gas. Under normal circumstances that should have been enough to shore up the industry and then some, even if it will eventually mean higher gasoline and heating costs for U.S. consumers.
But fossil fuel energy players face a new menace that even a compliant U.S. Congress may not be able to protect them from. In October the International Energy Agency significantly increased its five-year growth forecast for renewables, noting that in 2015 renewables surpassed coal to become the largest source of installed power capacity in the world.
Policy and investments shifts in the United States could significantly accelerate progress on that renewable energy growth. Instead federal and state officials seem trapped in a time warp, recycling land use, clean water, and now even Native American sovereignty battles to help producers get their commodities to market. Oil and natural gas pipeline projects are roiling Native American communities in the Dakotas and suburban towns throughout the northeast.
Fundamental questions have to be asked: Who really benefits, and are those benefits worth the risks and turmoil? If the needs being addressed are shoring up a wounded fossil fuel industry or allowing bankers enough time to extract returns on loans, the answer should be a resounding no to any more of them, especially if investment in the development of renewables could help the U.S. economy get the fossil fuel monkey off its back faster and permanently.
Economic, social, and ecological interests have to be held in a just balance in setting energy policy. Too often banks and energy producers have tipped policy to their specific profit interests, but residents in Pennsylvania facing contaminated water supplies and people in Oklahoma, Arkansas, and Ohio dealing with the unprecedented phenomenon of man-made earthquakes induced by fracking wastewater disposal have equal claims on policy setting. Native Americans worried over sacred lands and water supplies and New Yorkers worried over a gas pipeline’s proximity to an aging nuclear power plant also have claims that merit hearing.
Pope Francis has made care of creation a high priority. Addressing that will mean a change of daily consumption habits, but it also means urging priority shifts at the top in Washington, where political appointees and elected officials meet to set energy policy that will affect lives all over the world. That policy should not be set in oil by powerful industry lobbyists who bought their place at the table.
This article also appears in the January 2017 issue of U.S. Catholic (Vol. 82, No. 1, page 42).
Image: Jake Schueller
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