Trump's oil triumphalism will end in American tears

Yahoo

14-03-2025

Oil and gas triumphalism has swept all before it at this year's CERAWeek in Houston, agora of big oil and the world's fossil brotherhood.
Chris Wright, ex-fracker and now US energy secretary, came as a conquering hero, vowing to end the 'irrational quasi-religious policies on climate change' of the Biden era and boldly claiming the moral high ground. He accused green elites of robbing the West's forgotten half of their right to affordable energy and condemning the Global South to grinding poverty.
'Roughly 1bn people live lives remotely recognisable to us in this room. We wear fancy clothes mostly made out of hydrocarbons. We travel in motorised transport. We heat our homes in winter, cool them in summer, store myriad foods in our refrigerators and have light and entertainment at the flip of a switch. What about the other 7bn people? They want what we have,' he said.
This is a revealing window into the mental world of Trumpism. Has Wright any idea what the world looks like in 2025? Has he visited China lately? Does he think that most people in Asia, Latin America and the Middle East have no fridges, no lighting, no TVs, no heating and rags for clothes? Or is he just making it up?
Days earlier in London he declared war on the energy transition: 'Net zero 2050 is a sinister goal. It's a terrible goal. It's unachievable by any practical means.'
He should read the ''New Joule Order', a report this week by the Carlyle Group, which argues that large parts of the world are about to decarbonise at breakneck speed for reasons that have nothing to do with net zero. They want to rid themselves off traded oil and gas because these fuels are a strategic danger, and because there are now better alternatives.
'The energy transformation is on the cusp of re-accelerating. It will be driven by the quest for security, with nations creating a diversified energy mix of joules to insulate themselves from geopolitical, macro and financial risks,' it says.
Carlyle argues the Bretton Woods dollar system, with 'the US Navy as its muscle', has been the lifeblood of the oil economy for 80 years. Pax Americana is now disintegrating and the world can no longer rely on the free flow of crude and liquefied natural gas. 'If trade is under threat, then so are fossil fuels,' it says.
Well, indeed. China is the world's biggest importer of crude and LNG, and it is moving with alacrity to end this state of affairs. Most tankers pass through the Strait of Malacca, easily choked by US warships. The 'Malacca Dilemma' has guided Chinese strategic planning for two decades.
It is why China hit its target of 1,200 gigawatts (GW) of solar and wind power last year, six years ahead of schedule. It is why sales of electric vehicles (EVs) and plug-in hybrids will reach almost 100pc of the Chinese car market this decade. Citigroup thinks the EV share could hit 65pc as soon as this March.
Vietnam is achieving China's trajectory in even less time. Sales of EVs were almost 60pc of the new vehicle market in February, led by patriotic purchases of Vinfast's VF 3 starting at $11,800 (£9,115). CERAWeek has not got the memo that emerging Asia will never need all the crude and LNG that big oil wants to sell them.
Wright says the UK and Europe are committing industrial suicide in the name of climate policy. This cannot be allowed to stand. Germany fuelled its economy on cheap Russian gas until 2022. It was already becoming the sick man of Europe even then.
He is correct that America's fracking boom has led to a US petrochemical and rust bowl revival – though it has not saved US aluminium – but Europe had no such option. The North Sea has been in decline since the early 2000s. Europe's geology is poor. Explorers never found fracking gems comparable to America's Permian, Marcellus and Bakken, at least not at viable cost in exploitable regions.
Wright said there was 'no physical way' that wind, solar and renewables could replace fossil fuels. 'We need more energy. Lots more energy. That much should be obvious,' he said.
Actually, we don't, once you understand the fallacy of primary energy demand. When you switch to an LED light bulb you cut energy use eightfold. If you power it off renewables, you cut energy use by another two thirds, since two thirds of the energy used in gas or coal fired plants is wasted in heat. You get the point. Cutting-edge scholarship suggests that the world needs only 40pc to 45pc of today's energy supply to meet all our needs. Technology is magic.
I suspect that we are seeing the last spasm of serious green rejectionism, rather like the anti-auto backlash around 1905 when cars were a fickle toy of the rich. That all changed after Ford came out with its dependable mass market T Model for the working man in 1908.
The electro-tech revolution is in rude good health. Two trillion dollars were invested in renewable energy in 2024, and $1 trillion in oil and gas. Think tank Ember says 77pc of global electricity added last year came from clean energy. It will approach 100pc this year. Thereafter, renewables will eat into fossil demand for power.
The price of solar panels has fallen from $4 a watt in 2008, to 74 cents in 2013, and nine cents as of December 2024, close to free power. It is why the Pakistani people are deserting the grid and taking matters into their own hands by installing 22 GW of solar capacity in a single year.
Battery cells costs are already below the 'holy grail' tipping point of $100 per kilowatt hour, halving last year in China to $50. Nothing can compete with the duo of solar and batteries for the great majority of the world's population living in tropical and mid-latitudes.
Chris Wright evangelised African leaders last week with calls for a fossil blitz to reach 600m people without electricity. 'We've had years of Western countries shamelessly saying don't develop coal, coal is bad. That's just nonsense,' he said.
He is pushing a drug. The last thing Africa should do is to lock into an obsolete energy infrastructure, trapped in dependency on oil, gas and coal imports for half a century. It has the chance to leapfrog directly to solar mini-grids and cheap Asian EVs without needing thousands of miles of pylons, or needing to truck in fuel for transport.
Trump's zeal for foisting ever more US oil, gas and coal on the world makes even less sense given that the US itself will struggle to produce much more.
Two of the great lions of the fracking era warned at CERAWeek that the boom is already over. 'US oil production is beginning to plateau,' said Harold Hamm, founder of Continental Resources.
Scott Sheffield, former boss of Pioneer, said the best tiers would be exhausted by 2028. 'Everybody is running out of Tier 1 inventory,' he said.
The US is taking a big risk by doubling down on fossils and combustion cars. It may find in the 2030s that it has achieved the worst of all words: left on the sidelines of the global electro-tech economy, while at the same dependent again on imported oil and gas.
Will Trump end up being the man who blew America's energy independence?
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