The preference for fossil fuel investments is easy to spot in the industry's trade journals, as well as in recent statistical data and anecdotal reports of all sorts. According to the reliable International Energy Agency (IEA), private and public investment in fossil fuel projects over the next quarter century will outpace investment in renewable energy by a ratio of three to one. In other words, for every dollar spent on new wind farms, solar arrays, and tidal power research, three dollars will go into the development of new oil fields, shale gas operations, and coal mines.
From industry sources it's clear that big-money investors are rushing to take advantage of the current boom in unconventional energy output in the U.S. -- the climate be damned. "The dollars needed [to develop such projects] have never been larger," commented Maynard Holt, co-president of Houston-based investment bank Tudor, Pickering, Holt & Company. "But the money is truly out there. The global energy capital river is flowing our way."
In the either/or equation that seems to be our energy future, the capital river is rushing into the exploitation of unconventional fossil fuels, while it's slowing to a trickle in the world of the true unconventionals -- the energy sources that don't add carbon to the atmosphere. This, indeed, was the conclusion reached by the IEA, which in 2012 warned that the seemingly inexorable growth in greenhouse gas emissions of carbon dioxide is likely to eliminate all prospect of averting the worst effects of climate change.
Petro Machismo
The new energy euphoria is also fueling a growing sense that the American superpower, whose influence has recently seemed to be on the wane, may soon acquire fresh geopolitical clout through its mastery of the latest energy technologies. "America's new energy posture allows us to engage from a position of greater strength," crowed National Security Adviser Tom Donilon in an April address at Columbia University. Increased domestic energy output, he explained, will help reduce U.S. vulnerability to global supply disruptions and price hikes. "It also affords us a stronger hand in pursuing and implementing our international security goals."
A new elite consensus is forming around the strategic advantages of expanded oil and gas production. In particular, this outlook holds that the U.S. is benefiting from substantially reduced oil imports from the Middle East by eliminating a dependency that has led to several disastrous interventions in that region and exposed the country to periodic disruptions in oil deliveries, starting with the Arab oil embargo of 1973-74. "The shift in oil sources means the global supply system will become more resilient, our energy supplies will become more secure, and the nation will have more flexibility in dealing with crises," Yergin wrote in the Wall Street Journal.
This turnaround, he and other experts claim, is what allowed Washington to adopt a tougher stance with Tehran in negotiations over Iran's nuclear enrichment program. With the U.S. less dependent on Middle Eastern oil, so goes the argument, American leaders need not fear Iranian threats to disrupt the flow of oil through the Persian Gulf to international markets. "The substantial increase in oil production in the United States," Donilon declared in April, is what allowed Washington to impose tough sanctions on Iranian oil "while minimizing the burdens on the rest of the world."
A stance of what could be called petro machismo is growing in Washington, underlying such initiatives as the president's widely ballyhooed policy announcement of a "pivot" from the Middle East to Asia (still largely words backed by only the most modest of actions) and efforts to constrain Russia's international influence.
Ever since Vladimir Putin assumed the presidency of that country, Moscow has sought to sway the behavior of its former Warsaw Pact allies and the former republics of the Soviet Union by exploiting its dominant energy role in the region. It offered cheap natural gas to governments willing to follow its policy dictates, while threatening to cut off supplies to those that weren't. Now, some American strategists hope to reduce Russia's clout by helping friendly nations like Poland and the Baltic states develop their own shale gas reserves and build LNG terminals. These would allow them to import gas from "friendly" states, including the U.S. (once its LNG export capacities are expanded). "If we can export some natural gas to Europe and to Japan and other Asian nations," Karen Moreau suggested in February, "we strengthen our relationships and influence in those places -- and perhaps reduce the influence of other producers such as Russia."
The crucial issue is this: if American elites continue to believe that increased oil and gas production will provide the U.S. with a strategic advantage, Washington will be tempted to exercise a "stronger hand" when pursuing its "international security goals." The result will undoubtedly be heightened international friction and discord.
Is the Euphoria Justified?
There is no doubt that the present fossil fuel euphoria will lead in troubling directions, even if the rosy predictions of rising energy output are, in the long run, likely to prove both unreliable and unrealistic. The petro machismo types make several interconnected claims:
* The world's fossil fuel reserves are vast, especially when "unconventional" sources of fuel -- Canadian tar sands, shale gas, and the like -- are included.
* The utilization of advanced technologies, especially fracking, will permit the effective exploitation of a significant share of these untapped reserves (assuming that governments don't restrict fracking and other controversial drilling activities).
* Fossil fuels will continue to supply an enormous share of global energy requirements for the foreseeable future, even given rising world temperatures, growing public opposition, and other challenges.
Each of these assertions is packed with unacknowledged questions and improbabilities that are impossible to explore thoroughly in an article of this length. But here are some major areas of doubt.
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