There’s a solution to high gas prices. Americans will hate it.

Matthew Zeitlin

Source Link

The solution to high gas prices, to some energy executives, is obvious. But only in Europe.

French energy executives, including the chief executive of Total, one of the world’s largest oil companies, recently sent an open letter for the French people to “collectively take action on energy demand by reducing our consumption.”

Europe depends on natural gas especially for much of its heat and electricity that — although this is likely changing — greatly comes from Russia. The chief executive officer of Shell, which is based in London, said earlier this week that a “turbulent period in the world energy market is coming as Europe tries to replace natural gas that will likely be cut off from Russia.”

In other words, one way to lower energy prices and aid in the Ukraine war effort is to slow demand. Conservation can come in a variety of forms: driving less, lower temperatures in buildings in the winter, carpooling, using public transportation, replacing gas furnaces or working from home. In other words, asking consumers — who have been putting incredible strain on energy resources through surging demand — to use less.

But if Europeans could be eventually forced by Russia to do so, Americans often bristle at the very idea they should consume less.

That’s because Europe — and parts of Asia — have energy conservation and efficiency woven into their politics and economies in a way that the energy-rich United States does not.

Europe is acutely aware of the energy supply-and-demand problems

Natural gas and oil stockpiles are shrinking, and Europe especially expects to face a massive crunch in the winter, as gas demand goes up for heat and Russian supplies are expected to approach zero. There are other ways to get gas besides fixed pipelines — namely shipping liquefied natural gas (LNG) — but there are major constraints there as well. For one, the Freeport terminal was heavily damaged in a fire and likely won’t be operational for the rest of the year.

Europeans are not the only countries deeply dependent on gas and oil imports — South Korea, Japan and China are snapping up what liquefied natural gas they can.

“There will be more LNG supply coming into Europe, but will there be a lot of extra new LNG supply to plug the gap? I don’t think so,” Shell’s CEO Ben van Beurden said, according to Bloomberg.

But the European calls for conservations have not been matched by the United States — at least not yet.

“Europe and Asia and other developed industrialized nations take energy conversation a lot more seriously and have done so since the 1970s,” explained Gregory Brew, an oil historian at Yale University. Europe and Asia tend to be far more reliant on imported oil and gas, whether from the Middle East or the Soviet Union and now Russia, making energy conservation a matter of national security and survival after the Arab Oil Embargo and the rise of oil prices in the 1970s.

Meanwhile, the natural gas market tends to be more localized because it largely has to be transferred along a fixed pipeline infrastructure; liquefied natural gas can be exported and shipped internationally.

“I don’t think our natural gas situation is nearly as dire as Europe’s. We’re not in a situation where our supplier of 40 percent of our gas is in the process of cutting us off,” said Harrison Fell, a senior research fellow at Columbia University’s Center on Global Energy Policy.

“Conservation has always made sense and had political support,” Brew explained. “We don’t have that anymore in the U.S.; the main reason is that we have this very large, politically powerful fossil fuel industry that produces energy inside the U.S.”

That power has only expanded with the shale revolution, turning the U.S. into an oil exporter and gas-producing superhero that could exercise “energy dominance” on world markets.

“The reason [President Joe] Biden and Republicans aren’t talking about conservations is that it flies in the face of energy dominance that has been promoted by [Donald] Trump and [Barack] Obama. Instead of cutting demand, we should increase domestic product. … That’s why we don’t hear about conservation right now,” Brew said.

America looks past energy conservation in the conversation about high gas prices

Without conservation efforts, American businesses and consumers may be forced to conserve by the harsh logic of high prices — and it may already be happening.

When it comes to “changing our habits to reduce energy usage,” explained Fell, “the primary mechanism for that has been price, the price gets high enough, we start traveling less, the price of gas goes up enough, we change thermostat settings.”

In short, the president doesn’t put on a sweater; consumers look at their heating bills and decide to anyway; a national 55 mile per hour speed limit isn’t implemented, but maybe drivers try to keep a lower, more steady speed.