From Europe to California, energy markets are undergoing a profound stress test as free markets are eviscerated in the name of climate change. The consequences couldn’t be more apparent: unprecedented inflation, energy rationing, and global unrest. Government-mandated rigid adherence to ‘green’ ideologies is now the driving force behind investment in and development of energy resources, and millions around the world are paying the price. Only a truly all-of-the-above approach offers the necessary flexibility to restore a bright and prosperous future.
The world needs affordable, reliable energy — something only market forces can consistently deliver. These are precisely the principles that the Left has chosen to neglect. Unfortunately, there is no shortage of examples emphasizing the failures of the green dream — just look to Europe.
Germany styled itself the champion of bold climate action. But where has that landed the country? German citizens and industry are being crushed by the highest electricity prices in Europe, a leading German energy provider required a government bailout, and the entire German economy is exposed due to supply shortfalls and fuel rationing leading many citizens to head to the forests for energy. Germany’s path undoubtedly exposed Europe to the whims of our adversaries.
In France, the government was pressed to bail out its national utility provider. In Spain, Italy, and Greece, governments have imposed restrictions on air conditioning below 80 degrees during the blistering summer heat. In the U.K., warnings abound of a “lost generation” of small businesses unable to pay utility bills. At the same time, U.K. household energy costs are projected to eclipse the U.K.’s budget for education and defense combined, threatening to plunge two-thirds of households into energy poverty.
Meanwhile, the International Energy Agency increased its projections of global oil demand for 2022 by some 380,000 barrels at a time when spare production capacity is on the decline. Just recently, Saudi Minister of Energy Prince Abdulaziz bin Salman summed up the oil market as being in a state of “schizophrenia” as governments, including our own, send “erroneous” market signals ranging from market intervention to urgent pleas for production increases to threatening to end fossil fuels.
So, where is American — the once-hailed “swing producer” — production? Since my piece in July, which outlined the dangers of the Biden Administration’s ever-greener policies, the U.S. rig count has only stagnated. Compared to our height in 2019 of more than 1,000, the U.S. stands at a mere 765. “Schizophrenia” is an appropriate diagnosis.
However, the Biden administration is leading Americans on a destructive forced march in Europe’s footsteps. In 2021 alone, the Biden administration and the Left “invested” $755 billion into green energy. If that wasn’t enough, the ironically labeled Inflation Reduction Act heaps another $368 billion in so-called investments, not to mention the $250 billion in green loans. The injection of more than $1.5 trillion in taxpayer dollars into less viable energy while erecting barriers to more viable energy is the definition of “erroneous,” if not insanity.
Consider California. The state’s ample sunshine and high proximity to large electric demand centers make for an ideal environment for solar farms. Additionally, California’s mild climate results in per-capita residential energy consumption that is less than half of Michigan’s. The resulting lower demand for household heating and cooling should have meant that California’s grid would be under less stress than other states. So, what went wrong?
Despite California’s natural advantages, Golden State policymakers followed Germany’s example and squandered every opportunity to demonstrate the contributions of renewables. Laden with heavy regulation, taxpayer-funded subsidies, and anti-nuclear and -fossil policies, California’s heavy-handed market interventions resulted in a highly unstable electric grid and retail electric prices that are nearly 70% above the national average.
Make no mistake, renewable energy is critical to our energy mix, and we should continue to develop these technologies in places and in applications where renewables can play a positive role, but this requires an essential balance of variable renewables and reliable baseload power, like natural gas and nuclear.
The more energy we produce domestically — regardless of source — the better off our country is. But our policymakers must be flexible, not hostages of environmentalist groups. Above all, they must be sober-minded about the physical and economic limitations of current technology, our aging grid, and the risk of geopolitical flashpoints that emerge from the increasingly energy-starved world around us.
America has an immense abundance of energy resources to restore affordability and reliability to global energy markets. We don’t need trillions in taxpayer dollars to develop these resources. We need a government that embraces growth and enables producers to bring energy to markets so America can once again be a leading force of prosperity and security.
• Cody Campbell is the co-CEO and co-Founder of Double Eagle Energy Holdings IV and a Distinguished Fellow at the America First Policy Institute.