New York (Trends Wide) – High gasoline prices. Heating of homes impacted by high prices. Natural gas rising impressively in Europe. And blackouts in Asia. The global energy crisis shows how dependent the world is on fossil fuels and how it muddies aggressive climate action efforts.
The risk for Democrats is that high energy prices – and America’s biggest inflation scare in at least a dozen years – will make voters suspicious of efforts to rid the world of fossil fuels. And that’s a problem for the White House because President Joe Biden followed the most aggressive climate agenda in American history and has set a goal of carbon-free electricity by 2035.
However, the path to that ambitious goal is made more challenging by high prices for oil and natural gas, gasoline and even coal. Republicans have argued that moving too quickly toward that goal will drive up costs even more for Americans and unnecessarily eliminate jobs.
“There is a genuine threat of a backlash against the green movement,” said Greg Valliere, chief US policy strategist at AGF Investments. “Most people agree with the goals, but their good intentions tend to fade when they look for something to blame.”
$ 3 gallon of gasoline adds to inflation fears
The price of regular gasoline now reaches a seven-year high of $ 3.32 per gallon nationwide, up 5 cents in a week, according to the American Automobile Association (AAA). Gasoline averaged just $ 2.17 a gallon a year ago, a time when fewer people were driving, flying and commuting.
Americans despise high gas prices and, fair or not, tend to blame whoever is in the White House.
“You can argue that this is not Biden’s fault, but he is the president,” Valliere said. “If you’re the quarterback and the team isn’t doing well, you get a disproportionate amount of blame, whether you deserve it or not.”
More than any other good or service, consumers view gasoline prices as a proxy for the cost of living.
“You just stand there and watch the LED screen add up to every dollar,” said Ed Mills, Washington policy analyst at Raymond James.
The $ 3.30 gas is only amplifying inflation fears that are spreading across the United States. Consumer prices rose 5.4% in September, tied for the fastest 12-month pace since 2008. The energy crisis, coupled with the nightmare of the global supply chain, threatens to keep inflation high during the next few months.
National gas prices soar, especially in Europe
It’s not just gas prices that are creating distress right now.
Natural gas prices have soared to levels not seen since 2008, prompting the US Energy Information Administration to warn of considerably higher home heating costs this winter.
China is also grappling with a power shortage that has led to blackouts and factories closed.
In Europe, natural gas prices have soared much higher, setting new all-time highs. The continent is grappling with a full-blown energy crisis, forcing some factories to suspend operations.
The International Energy Agency recently said that Europe’s peak in natural gas has been driven by a confluence of factors, including strong demand, tighter-than-expected supply, cold temperatures last winter, and “more wind power availability. lower than usual. “
“Well-managed clean energy transitions are a solution to the problems we are seeing in the gas and electricity markets today, not the cause of them,” IEA Executive Director Fatih Birol said in a statement to end of last month.
“A warning sign of what could happen here”
Still, critics of the climate provisions in Biden’s broad economic package have pointed to the overseas experience as a warning to the United States.
“In Europe there has been a very rapid acceleration towards the energy transition. I would say it was too fast,” Mike Sommers, president and CEO of the American Petroleum Institute, told Trends Wide earlier this month. API, the powerful oil and gas industry trade group, is fighting tooth and nail to remove or reduce climate provisions in the $ 3.5 trillion plan.
“Lawmakers in the United States should pay close attention to what they see in Europe as a warning sign of what could happen here,” Sommers said, adding that other factors are also at play in Europe, including Russia as an “actor. hard”.
The key program Democrats hoped would accelerate America’s energy transition may now be left out of their huge economic bill after the rejection of West Virginia Sen. Joe Manchin. Congressional sources told Trends Wide late last week that the Clean Electricity Performance Program, which aimed to replace coal and gas power plants with solar, wind and nuclear power, will likely be removed from the legislation.
Mills, Raymond James’ strategist, said that high energy prices are also likely the “death sentence” for efforts to increase revenue for the larger package through a carbon tax.
Beyond that, Mills doesn’t think the global energy crisis will change many minds in the current debate.
“If anything, it makes it more complicated,” Mills said, adding that “all parties will deepen their current positions.”
The case for clean energy
In fact, climate action advocates see high energy prices as proof of why the world needs to say goodbye to fossil fuels.
“We depend on volatile fossil markets, but we don’t have to be,” Trevor Higgins, senior director for national climate and energy policy at the Center for American Progress, a liberal think tank, told Trends Wide. “Switching to clean energy is actually a way to protect ourselves from rising costs.”
Higgins compared the situation to that of an investor who puts too many eggs in the same basket.
“Like the way an investor will diversify their portfolio, our energy system needs to diversify its resources so that we have redundancies,” Higgins said.
For example, a key part of Biden’s climate agenda is a push to accelerate the adoption of electric vehicles through tax credits and investments in battery technology.
The logic behind supporting electric vehicles makes even more sense at a time when Americans pay high prices for gasoline. Greater adoption of electric vehicles should ease demand for gasoline, preventing prices from rising.
Floods, hurricanes and heat waves compound the energy crisis
Another factor complicating the climate debate is the role extreme weather has played in limiting the supply of fossil fuels.
The floods have wiped out coal production in China, contributing to energy shortages in that country.
Heat waves in the United States increased electricity use this summer, depleting natural gas supplies heading into this winter.
Hurricane Ida shut down nearly all of the Gulf of Mexico’s oil and gas production and shut down refineries in the region late this summer.
“Climate change is part of the reason prices are high,” Higgins said. “If we stick to dependence on oil and gas, we will worsen the climate crisis and cause more disruption due to more heat and stronger hurricanes.”
However, it remains an open question whether Democrats can credibly argue.
Republicans can find it much easier to show the merits of drilling more to combat high gas prices.
“For those who want provisions on the weather, they will have to sit there and explain the higher gas prices,” Mills said. “And in politics, when you are explaining, you are losing.”