The Great Energy Transition
It would be fruitless to re-litigate the overwhelming sentiment that the climate crisis is a thing to be feared and reckoned with, even given the fact the this writer experienced dozens of significant hurricanes dating back to 1965 when Cat 4 Hurricane Betsy came barreling in parallel to the Mississippi River and flooded areas surrounding New Orleans and the 1969 Cat 5 Hurricane Camille which hit just east of New Orleans and literally destroyed the Mississippi Gulf Coast. And there have been many others, including Katrina in 2005 which put the city of New Orleans underwater. This writer sees no significant trend in the severity of hurricanes due to atmospheric warming or any other cause. The other big concern in the climate crisis is sea level rise which can exacerbate the damage of storms and hurricanes. Rising temperature arguably causes the sea to rise; however, the U.S. government’s own data show that sea level has been rising a steady 2 mm per year for the last 200 years – long before industry greenhouse gas emissions were a thing. What we are not told is that the expensive coastal developments were build on ground that is subsiding at an average rate of 5-7 mm per year. So you see, the real problem is not sea level rise but “relative” sea level rise.
All this to say that our leaders, rightly or wrongly, have placed a stake in the ground to combat the crisis. The problem is that we have another even bigger crisis on our hands, called the energy crisis, that threatens to dwarf the climate crisis. Our leaders have put in place new regulations and policies to avert the first crisis and are flat footed on this new, impending crisis. We call this global effort the Energy Transition. Most of us knew there would be an energy transition. In fact, the transition started back in the 1800’s when we stopped using whale oil. Fortunately for the whales, the oil men discovered petroleum and the energy transition enabled us to have electricity, automobiles, and airplanes. Living in the Deep South, this writer is especially grateful for the cheap natural gas that enables us to cool our homes and offices in the summer when the sweltering heat and humidity descend like a big, evil monster.
Transitioning back to sea level for a moment, geologists explain that the reason why we have oil and natural gas is due to sea level changes. In years past, millions of years, the sea level went up and down by as much as 400 feet. As the marine organisms (plants, algae, bacteria) died and were deposited and subsequently covered, they produced a store of energy for us who discovered it years later. Petroleum is a store of the sun’s energy (through the photosynthesis of the marine organisms). Today, through technological advancements, we have found a way to harvest the sun’s energy through wind, wave, and solar power. Unlike petroleum energy, these new forms of “renewable” energy must be used when they are harvested. There is little ability to harvest and store this energy.
The “Great Energy Transition” is now in full swing. It is a good thing because ever since we realized that killing whales for energy was not sustainable, we understand that our current energy mix is not sustainable and must transition. The problem is that the nervous nellies want us to transition, like, yesterday. They fear what they see on the Weather Channel will become more and more intense and wide spread. Don’t misunderstand – the Weather Channel serves an important purpose, but they should stick to what they know and not create fear and uncertainty about the future which they don’t know.
So the big questions are: how should the transition occur and when? The markets have always been a good tutor when not manipulated. They don’t lie. The markets are telling us that energy is becoming very expensive with crude oil and natural gas prices doubling in the last year. Prices are rising because the post-COVID economy is heating up, and energy supplies can’t keep up. However, underlying this recent development is a relatively long stretch of underinvestment in hydrocarbons and coal and a much bigger investment in green or renewable energy. Have the markets tutored the world’s companies to do this? Yes, to some extent, but more to the point, they have also been tutored by activist government leaders and investors who feel good about becoming more sustainable. However, their constituents and clients are now feeling rather sick to their stomachs when they go to the pump to fill up their cars and trucks and pay their utility bills.
Government leaders must be held accountable by the people they govern at the privilege of the governed – those that cast their vote. Don’t kill the goose that laid the golden egg. Be smart about the transition. Allow the energy professionals and workers who found the goose and cared for her all these years continue to give us golden eggs and at the same time prudently transition us to new and better forms of energy that run our mechanized economy and give us what we need to live on this wonderful planet.
One very smart approach is to take the roughly 1600 offshore oil and gas platforms, many of which are reaching end of life, and repurpose them to offshore renewable energy, carbon storage, and other marine-related uses that will build a new, “Blue Economy”.