Are we nearing an energy Trumpocalypse?
From GreenBiz
The defining public events of my
adolescence were Richard Nixon's Watergate Scandal and the two "Oil
Shocks" of the 1970s: the 1973 Arab Oil Embargo and the Iranian
Revolution-induced 1979 oil crisis.
Also noteworthy in my recollection
of that era was moving into a house in the suburbs of Chicago, in 1973, with a
fully equipped bomb shelter in the backyard.
Even though the shadow of nuclear annihilation still
loomed pretty large on the collective conscious during the pre-detente
mid-1970s, the hysteria of the Cuban Missile Crisis that had led to the bomb
shelter-building craze a decade before by then seemed quaintly antiquated to me
and slightly amusing in a morbid sort of way.
Just two weeks into the Trump administration, these
childhood memories seem more real and relevant to me than they have in decades.
We know now that President Donald Trump is hellbent on
fulfilling his campaign promises, no matter how illogical or ill-advised that
they were when made — and remain now — and no matter how negative the
fallout domestically and internationally. For those who hoped it was all just
election season demagoguery, you now know that you were grievously wrong.
“Leaders
of the renewable energy industry comfort themselves with statistics showing
that the solar industry provides four times as many American jobs as the coal
industry, but that could turn out to be cold comfort”.
Even now,
leaders of the renewable energy industry comfort themselves with statistics
showing that the solar industry provides four times as many American jobs as
the coal industry, but that could turn out to be cold comfort. Be mindful that
Candidate Trump gave assurances to coal workers, not solar workers and, in
return, the citizens of West Virginia gave him nearly 68 percent of their
votes.
Bare knuckles
Going
back to where I began, coal versus solar is not my foremost concern right now.
What concerns me is Trump's bare-knuckled approach to foreign policy combined
with his unique gift of being able to unite strange bedfellows in virulent
opposition to him and to the true interests of the United States. This, I fear,
may land us in a seriously compromised position within a relatively short
period of time, and those of us in the energy business soon may find ourselves
at the vortex of a geopolitical storm.
Trump
already has pissed off Mexico and united all Mexicans — everyone from Carlos
Slim and President Enrique Peña Nieto all the way down to the most unassuming
campesino — in a common revulsion to his policies and statements.
But
Mexico, to a considerable extent, has to turn the other cheek and play nice to
its massive northern neighbor. China and the oil-rich countries of the Middle
East, on the other hand, aren't quite so beholden.
“Mexico
has to turn the other cheek and play nice to its massive northern neighbor.
China and the oil-rich countries of the Middle East aren't quite so beholden”.
Circumspect
for now, it is hard to imagine the Chinese leadership tolerating Trump and his
provocations for long. He already has trampled on what is sacred to them, the
One-China Policy. Add to the mix his virtual promise of a trade war, his
repeated accusations of currency manipulation and his chest-thumping vow to
roll back China's island-creation strategy in the South China Sea. All of
Beijing's buttons already are being pushed and Trump hasn't even really focused
his Twitter missile on China yet.
And then
there are the Middle East and America's relations with the Muslim world. With
his words and anti-Muslim actions, Trump actually may achieve the heretofore
unthinkable, uniting two mortal and implacable foes, Iran and Saudi Arabia, in
common opposition to the United States. Iran needs no further encouragement.
Saudi, for the time being, is still trying to accommodate its traditional ally
and protector.
But what
if the Trump administration adds Saudi Arabia to the Muslim nation travel ban
(commentators already having pointed out that most of the 9/11 hijackers were,
in fact, Saudis)? And what if, in short order, Trump peremptorily moves the
United States embassy in Israel to Jerusalem? By so doing, he severely will
undermine Saudi Arabia and the other moderate Sunni states and blow up their
tacit regional alliance with Israel against ISIS, Iran and Tehran's other
proxies in the region.
Might
Saudi Arabia and Iran collaborate in leading a Middle East oil-producer boycott
of the United States?
Could a
second Middle East oil embargo happen, 44 years after the first one?
Embargo 2.0
Not
likely, you might say, because the oil producers depend on a constant stream of
oil revenues to maintain their domestic security. But what if cash-rich but
resource-poor China quietly steps in, looking to put Trump in his place, and
offers to buy up all the oil that the embargo-ists want to sell?
“If an
oil embargo were launched against the United States, would it be effective?”
It is
true that the United States itself doesn't import that much oil from the Middle
East — between 1 million and 2 million barrels a day out of roughly 5 million
barrels a day of net imports. But keep in mind that the 1979 oil crisis was
caused by only a 4 percent dip in global oil supply.
Certainly
the effectiveness of an Middle East oil embargo would be amplified or mitigated
by the willingness of oil producers from other regions to step up shipments to
the United States, so let's look at what nations we buy oil from. Apart from
Saudi, the four biggest oil exporters to the United States last year were
Nigeria (Islamic), Venezuela (not our friend), Mexico (oops!) and Canada (one
out of five is not bad!).
If an oil
embargo were launched against the United States, would it be effective?
Under
almost any circumstance, an oil embargo would cause sharp price increases and
severe supply dislocations, affecting all Americans. Surely there would be some
winners — domestic oil producers for instance; Trump may not "make
American great again" but he certainly would "make North Dakota great
again." Meanwhile, the American economy, American workers and American
energy consumers would all be big-time losers.
Is this
embargo scenario probable? Not yet, but it is possible and, indeed, far more
likely today than the zero percent chance that existed just two weeks ago.
The
sustainability movement, both morally and economically, has its roots in the
innate scarcity of all natural resources. What sets environmentalists and
sustainability advocates apart from others is our insistence on worrying about
the circumstances of future generations tens and hundreds of years into the
future, and the potential unavailability to these generations, our descendants,
of those same resources that have so enriched our lives.
Living in a bubble
Since the
Great Recession, now almost 10 years ago, we have been living in a bubble of
resource abundance. This current abundance has masked the finite nature of
Earth's natural resources. Absent a geopolitical disruption, the era of energy
abundance seemed destined to continue into the foreseeable future, particularly
in the United States.
Quite
suddenly, the risk of geopolitical disruption looms large. It is now incumbent
upon all of us, no matter whether we are on the supply or demand side of the
natural resource equation, to scenario plan the possibility of sudden, severe
and prolonged disruption.
“It is
now incumbent upon all of us, no matter whether we are on the supply or demand
side of the natural resource equation, to scenario plan the possibility of
sudden, severe and prolonged disruption”.
And that
is where the clean energy community looms large. The inexhaustible,
non-disruptible and highly cost-competitive nature of our renewable energy
resources suddenly may assume magnified importance, but only if these resources
can be offered to consumers in a user-friendly way that enhances resilience and
ensures reliability.
So
whether you are in residential solar or electrified transportation, provide
clean energy-related services to the commercial and industrial sector or do
something else in the sustainability world, get ready: Your customers may be
calling.
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