U.S. Must Learn From Europe’s Energy Struggles, Not Repeat Them

Mark Green
Posted September 29, 2021

Europe’s ongoing energy crisis (noted recently here) should give pause to U.S. policymakers who’re leading a head-long rush to a near future in which Americans’ daily lives and the U.S. economy will be virtually dependent on intermittent energy sources such as wind and solar.

We’ve made the case that dropping natural gas and oil from the U.S. energy portfolio, heavily relying on come-and-go energies, is unwise, bordering on foolishness. It’s disconnected from reality, a reality that’s playing out right now in Europe.

Writing in the Wall Street Journal, Allysia Finley describes a continent where economies are gearing down for lack of affordable energy as wind power, in particular, has fallen short – because there hasn’t been enough of it this summer. Consequently, costs for coal and natural gas – both now in high demand – have risen, as have costs for manufactured goods and other products. Electricity prices have skyrocketed.

While increased coal use is problematic for the environment, there’s another concern: increased European dependence on Russian natural gas – with Europe not interested in developing its own natural gas reserves. Finley writes that Russia is leveraging this role:

Russia is exploiting Europe’s energy difficulties by reducing gas deliveries, perhaps to pressure Germany to complete certification of its Nord Stream 2 pipeline, which bypasses Ukraine. Russia’s Gazprom has booked only a third of the available transportation capacity through its Yamal pipeline for October and no additional deliveries via its Ukraine pipeline. Europe has become ever more dependent on Russia—the world’s second largest gas producer, after the U.S. – for energy because the U.K. and Germany have banned hydraulic fracturing, letting their rich gas shale resources go to waste. Meantime, the Netherlands is shutting down Europe’s biggest gas field.

The situation in Europe should be a red flag for the U.S. The world’s leading producer of the world’s leading energies, natural gas and oil, should build its energy security now and in the future on the reliability, adaptability and energy density of natural gas and oil.

Yes, renewables will be critically important in the decades to come. Yet, for wind and solar power generation to grow there must be a reliable partner, natural gas – in quantities large enough to put downward pressure on prices and take advantage of the environmental benefits that natural gas-fueled generation provides compared to coal-fired generation. According to the U.S. Energy Information Administration, more than 61% of carbon dioxide emissions reductions in the power sector from 2005 through 2019 resulted from increased use of natural gas and decreased use of coal.

Unfortunately, we’ve seen policy steps that discourage U.S. natural gas production (as well as oil). The Biden administration has paused indefinitely new leasing on federal lands and waters. It has moved to restrict access to reserves in Alaska and other places and, more generally, has signaled natural gas and oil shouldn’t be part of the future energy mix. Yet, alarmed by increasing U.S. gasoline prices, the administration begged OPEC+ this summer to produce more oil, bypassing American producers. And those communications with the cartel have continued, the White House acknowledged this week.

Meanwhile, in Congress there’s talk of a new tax on natural gas as part of budget reconciliation, which also could further hamper domestic production. API President and CEO Mike Sommers in a Washington Post op-ed:

Proposals that single out our industry for higher taxes – in this case to help pay for trillions in reconciliation spending – risk chilling new American energy investment and production and could harm the economy and weaken national security.

Finley:

Europe offers a portent of the havoc to come under the Biden administration’s policies that aim to shut down fossil-fuel production and power the U.S. grid exclusively with renewables.

Sound energy policy includes building energy infrastructure. Yet, this also has become increasingly difficult, with pipeline projects running into difficulties at the local and state levels. This week, the PennEast natural gas pipeline was shelved, largely because it hasn’t received all required state permits from New Jersey.

These combine to paint a picture of concern for the U.S. and meeting Americans’ energy needs. Given our country’s energy abundance and Europe’s current struggles, the situation is perplexing. U.S. Senate Majority Leader Mitch McConnell, R-Kentucky:

“Right now, as we speak, many of our allies in Europe are preparing for major energy disruption this winter. … This is no time for America to declare war on our own independence, on the affordable forms of energy that power this country. The rest of the world is battening down the hatches for a global natural gas crunch that could leave entire countries rationing winter heat. And President Biden wants to let radical progressives declare war on American fossil fuels? Is this a joke?”

It's a joke only if the U.S. plays along, ignoring what we’ve seen unfold in Europe. Sommers, in remarks last week to the Economic Club of Pittsburgh framed America’s energy outlook in a series of straight-forward questions:

“The challenge of meeting the world’s growing energy needs at the same time that we are building a lower-carbon future is massive, intertwined and fundamental. Our industry also views it as the opportunity of our time, and one we are uniquely positioned to meet with our scale and expertise, aided by smart policies and relentless innovation. …

“[D]o we want natural gas and oil companies to keep working toward a cleaner energy future with government partners, other industries and fellow innovators to meeting energy needs? Or do we want policies that could put America at a disadvantage – jeopardizing jobs, increasing energy costs and harming American competitiveness?”