The geopolitics of geophysics: US oil output boomed under Obama-Biden, then surged under Trump's "American energy dominance"
The 2015 Paris Agreement to protect the climate just turned five years old, with the UN’s 2020 Production Gap report noting that governments’ planned oil production by 2040 is three times above what is consistent with the 1.5C goal agreed in Paris. President-elect Biden’s bold promise to “transition from the oil industry” now needs not only an ambitious plan for oil’s just transition domestically but also new diplomatic approaches to help align long-overdue international actions urged by scientists.
As Biden builds his climate team, the world’s other top oil producers—led by Russia and Saudi Arabia in the OPEC-plus alliance— are debating a deepening dilemma on the uncertain future of oil demand, opening potential opportunities should Biden’s decisions center climate science as seriously as COVID’s. Scientists say it’s past time governments accelerate the transition from oil, so how fast will Biden act on his clear campaign promise to set forth such a process, and one based on the justice principles of his and Vice President-elect Kamala Harris’ platform?
JP Morgan’s Head of International Oil and Gas Research predicts, “you’ll probably see the US help intervene to find some common ground given there is a mutual interest for both sides to advance their economies, given, particularly, longer-term pressure on the demand for oil. If we do ultimately see peak demand in the next 10-15 years, then the whole GCC (Gulf Cooperation Council) is going to have to transform itself and think more about domestic priorities.”
Other oil analysts say peak oil demand has already past due to COVID’s accelerating the energy transition away from fossil fuels toward renewables such as solar and wind. In any demand scenario, peaceful transitions are imperative, and there many ways the US and its allies can support other countries’ efforts to exit oil entirely or otherwise diversify their economies to prepare for prudent levels of oil production, per IPCC findings.
PRESIDENTIAL PROMISE
When Biden stood on his last debate stage and spoke of transition from oil, he stunned not only his opponent Trump but also many in the growing movement of keep-it-in-the ground climate protectors, who see there’s simply no remaining space in our atmosphere to accommodate the added emissions from burning more fossil fuels.
Biden agreed after Trump retorted, “Ooohhh, that’s a big statement,” then he patiently asked Trump to let him finish his statement, driving forward his open hand to proclaim, “oil has to be replaced by renewable energy, over time, over time…and I’d stop giving to the oil industry, I’d stop giving them federal subsidies.”
Recalling how his family grew up near oil refineries, Biden said what matters most to fenceline communities, who live by oil operations, is “how you keep them safe.” Trump tried to crucify Biden on the campaign trail with his promise of oil transition, projecting Biden’s best video soundbytes on the big screen before unmasked masses in oil-producing swing states such as Pennsylvania, but Biden won more votes.
Vice President-elect Kamala Harris and he know people need a just transition, having made environmental justice the cornerstone of their policy approach. Doing the US’s “fair share” for the climate means acting now on the science to start stopping fossil fuels by beginning a transparent, global process for a fast and fair transition from oil. The domestic and diplomatic actions will take decades to do but if, in fact, “America is back” it must animate a planned phase down of all fossil fuels and especially oil, offering support to other nations also striving to transition away from their oil-dependency. The geopolitics of geophysics forges a new narrative where cooperation becomes more important than competition in resetting relationships with perceived allies and adversaries.
Kerry’s contentious claim (that the US is responsible for only 13 percent of global emissions; even Biden’s Climate Plan acknowledges 15 percent) indicates that too few of his advisors appear aware, or perhaps care, that China is actually the only country so far pledging in Paris to do its “fair share” of climate action, as assessed by a global civil society review. And that assessment was before four years of Trump’s foolhardy “American energy dominance” surged the US to the position of world’s top oil producer. Of course, the US fracking boom began by Obama-Biden-Kerry’s “boosting industry competitiveness” with clean water/clean air exemptions and export promotions, only to be bankrupted under Trump by Saudi Arabia’s pumping more oil as COVID dropped demand.
American energy independence is a mirage since the economic viability of US shale oil companies now depends on Federal Reserve purchase of debt from fossil fuels companies, together with continued Saudi-Russia cooperation to limit their own oil production low enough levels to keep prices high enough for US shale oil producers and investors to profit. Indeed, it was the Saudi-Russia oil price dispute—not the pandemic sweeping the planet—that caused the oil price collapse, and with it the US shale oil sector, and its investors triggering broader financial panic.
In both reversing Trump’s oil bailout and resetting relations with other nations, it’s imperative the US centers peaceful cooperation to protect our planet, whose shrinking atmospheric space for accommodating additional emissions has entered a new strategic arena that must be sorted equitably, and expeditiously.
BIDEN’S CLIMATE DIPLOMACY
Oil’s just transition builds on the President-elect’s promise to transition from oil and to prioritize justice perspectives, requiring a transparent global process that is fast and fair. The Production Gap report shows that countries must cut their oil production by 4 percent per year, although much more must be done to improve scientific understanding of prudent oil production under 1.5. The UK just set a target for total emissions of 68 percent by 2030, setting the bar high for Biden; but Biden has himself raised his own rhetoric, knowing well what matters most is action.
The US should surely take the first steps as a good faith sign to establish trust but do so with purpose of the vision that what the world needs is a coordinated, collective phase out of oil (over the next few decades) that is fast, fair, transparent and based on science, supporting just transitions of all countries. The US also bears a responsibility to lead efforts to support such a process due to being today’s top oil producer, top oil consumer, biggest beneficiary of the oil economy and its resulting greenhouse gas emissions, and most able to find alternative economic activities to replace oil.
Addressing supply-side issues has always been the missing piece in climate policies and now Biden has made an opening bid to lower the levels of oil production, which must be reduced dramatically if the world is to cut emissions in half by 2030, as advised by the IPCC. As Biden reduces American oil production, the US should support accelerated efforts to diversify from oil by other top oil-producing countries, particularly Russia and Saudi Arabia.
One other opportunity is teaming up with top oil-consuming countries—the EU, China, and India—to drive down oil demand since it is ultimately each country’s sovereign choice what energy to use. Major cities and states are already banning sales of autos with internal combustion engines over the next decade but what we need now is nations to scale-up and speed-up such collaborative actions.
A complementary opportunity is convening a new conversation with all oil producing countries about just transition based on better understandings of the science of prudent oil output and a transparent plan for phasing down—but perhaps not out—oil by 2050. Give scientists more say.
OPEC-PLUS DEBATES DIVERSIFICATION FROM OIL
Led by Saudi Arabia and Russia with the objective of stabilizing oil prices, the 23 members of OPEC-plus just agreed to now meet monthly (online) to adjust production, as needed. Although this time, the UAE brought forward the deeper debate on diversifying from oil which the Biden transition team should be following as it fills positions and formulates its policy approaches.
Trump established an ongoing but unofficial dialogue with their like-minded leaders to bargain for oil production and stabilize oil prices. US shale oil producers benefit from OPEC-plus restricting their own oil production but a price recovery relies on two other things: higher demand and OPEC+ holding the line on production curbs, underpinned by its cagy core countries, Russia and Saudi Arabia. Other oil-producing countries also have an inherent interest in the US reducing oil production, so the US restricting its own supply could be an incentive for others to also step up action.
While price stability is important to maintain, so is stability for our planet’s atmosphere, primarily by keeping any average temperature increase below the 1.5C limit of the Paris Agreement. If set forth in a new strategic frame focused on cooperative action, OPEC-plus countries’ efforts to economically diversify from oil could be facilitated by better stabilizing oil prices, something Biden’s stronger standards for cleaner air and water might make more viable as US shale oil production becomes more expensive.
Biden began a debate long overdue, so let us now leverage national action for greater global change, where the US acts first to draw down its oil overshoot and others join with US support. The Green New Deal rightfully centers workers’ concerns by rolling out renewable energy and now we also need to rapidly reduce the use of energy supplies polluting our planet perhaps beyond repair. Rather than ramming oil pipelines like Line 3 through indigenous peoples’ treaty territories in the Headwaters of the Mississippi River in northern Minnesota, oil infrastructure permits and crude oil exports should be stopped to build resilient infrastructure for communities and countries with good union jobs. Oil’s lower-for-longer price outlook, record low employment, shrinking stock values, and ever-increasing liabilities make now time to turn decisively toward just transition plans and policies.
Biden can begin boldly when he formally rejoins Paris. As the US submits its updated Nationally Determined Contribution, he could include, as part of a US commitment to do its fair share, a section on transitioning from oil supporting a transparent process that is fast and fair, followed by closely working with other oil-producing and oil-consuming countries to phase down expansion and extraction while fast tracking solutions for all countries and communities. Words matter only when they animate action.
