Yahoo Finance columnist Rick Newman explains how the fight against climate change is impacting the energy crisis.
SEAN SMITH: The war on fossil fuels has intensified in recent years as the world focuses on ways to combat climate change. But these efforts wreak havoc when it comes to producing the energy people need, such as oil, natural gas and other types of carbon-based fuels. Over the past five years, the price of crude oil has jumped almost 34%. Yahoo Finance Chief Economist Rick Newman joins us now and explains a difficult situation. Rick, what can you tell us?
RICK NEWMAN: Hi Seana. I mean, obviously all year we have been paying attention to the problem caused in world energy markets by Russia’s invasion of Ukraine. And that is very important and will remain very important as long as this war is going on. But there is something else that is also very important that is happening.
Clearly there is strong pressure in the United States, Europe and other countries to invest in renewables and other forms of green energy to address climate change and global warming. . And this is necessary. But there’s something else that’s also needed that isn’t happening as much, and that’s safeguarding the fuel supply that everyone needs today. And it’s mostly oil and natural gas.
And we’ve seen the effects of moderate reductions in new oil and gas capacity. But this oil and gas is going nowhere. We will need as much oil as today for at least another 10 years, and perhaps as much natural gas for the same period. And we’re not investing in that part of the energy infrastructure. A big piece is therefore missing from this energy transition from fossil fuels to green energies.
It’s a very complicated story. And I tried to lay that out as clearly as possible in an article we just published, but just one thing that I find extraordinary and have come across in my reporting. We are actually seeing a huge increase in the use of coal to fuel power plants. And that’s because utilities can’t get enough natural gas this winter. Thus, coal is likely to reach new records, the use of coal. This is according to the International Energy Agency.
And the price of coal has skyrocketed. I mean, it’s the dirtiest form of fossil fuel. And we burn a lot more. We may be burning more than ever. And that’s because we don’t have renewable energy yet and utilities can’t get natural gas. So there are all kinds of unintended consequences that happen. And this is just one of them.
– It’s an odd dynamic given the long war on coal. So what will be the impact on the prices of gas, natural gas, in the short and long term because of what you have just exposed?
RICK NEWMAN: Well, let me talk about natural gas because in some ways I think it’s more important than oil, which is getting the most attention. And of course, consumers pay the most attention to gasoline prices, which obviously affect oil prices. But natural gas is really important because it’s the primary fuel source for electricity, which utilities burn to generate electricity.
So right now we’re seeing natural gas prices here in the United States about 25% to 30% higher than they were at this time a year ago. And a year ago they were much higher than the year before. Natural gas prices in Europe are much higher than a year ago. This is because they were getting a lot of it from Russia and they have to find new sources.
It’s kind of weird because we have a lot of natural gas in the United States. I looked in the Appalachian Basin, which is this huge deposit that stretches from Maine all the way to Alabama. It is one of the largest natural gas fields in the world. And yet we can’t get most of that gas to American consumers or put it on the world market because the pipelines keep getting killed. There were at least five pipelines there that would have brought that gas to consumers on the east coast of the United States and could have exported it to Europe or elsewhere.
And we just can’t get the gas out, so this winter is going to be costly for a lot of Americans. And in the northeast, where they depend on fuel oil, we might actually have fuel oil rationing when there’s not enough for everybody because they can’t get enough natural gas in the northeast, fuel oil is similar to diesel. We have kind of a diesel fuel shortage right now. Like I said, it goes on and on. It is multifaceted. There is a lot to do. But something is wrong with saving energy.
– And it’s strange – not enough attention given to the short or long term consequences of this. Senior columnist Rick Newman appreciates that.
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