Vattenfall, a Swedish wind turbine manufacturer, has a slogan: “fossil freedom.” Their website says: “We are working for fossil freedom.”
This concept, “fossil freedom,” is interesting because my very first reaction was, “fossil is freedom.”
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The United States is the largest oil and gas producer in the world, enabling and enhancing greater U.S. and global energy security with every additional molecule of “fossil” fuel it produces.
Since the U.S. began exporting natural gas, global spot prices were pressured, reducing the pricing leverage regional players such as Russia had on Europe for piped gas. With more natural gas molecules on the water, nations began to have options not only in terms of what fuel they want to purchase to generate power, but from whom they wish to purchase it.
In February of 2022, when Russia invaded Ukraine, European exposure to Russia was roughly 18 billion cubic feet (Bcf) per day, 16 Bcf/day in pipe, and 2 Bcf/day in liquefied natural gas. Today the US exports around 15 Bcf/day to European and Asian nations. The Trump Administration and Secretary of Energy Chris Wright are approving LNG permits and actively increasing U.S. natural gas exports. Natural gas is freedom.
U.S. production of oil grew from under 5 million barrels per day (mbd) at the beginning of the shale boom in 2008 to 13.5 mbd today. With this more than doubling of production, U.S. imports of oil also fell, allowing more crude from Africa and the Middle East to go elsewhere, directly increasing not just U.S. energy security, but global energy security.
Unlike natural gas, which is still a relatively nascent and growing market (of the 398 Bcf/day in natural gas consumption, roughly 55 Bcf/day is LNG), oil is more transportable and fungible. Despite greater energy production and physical barrel security, barrels move, and prices are set globally. While the U.S. imports 4 mbd from Canada, the U.S. exports over 10 mbd of crude and refined product, 4 mbd of U.S. oil, and several million barrels per day of propane, gasoline, and diesel. This allows nations from all over the world to purchase U.S. crude oil, drilled and produced under rule of law and free from human rights abuses. Oil is freedom.
But access to energy is not just about enabling freedom and security. Affordable and reliable energy is required for the prosperity of households and small businesses and is essential for national security.
Many countries in Europe, including Germany, have some of the highest electricity prices in the world. German electricity prices are now 44 cents a kWh. While U.S. electricity prices have escalated under the aggressive green policies of states and the Biden administration as coal-fired power generation is decommissioned and wind and solar power is added, U.S. prices are still around 18 cents a kWh on average, less than half of that of Germany. And yet Germany, and much of Europe, have increased their NATO spending this year but are set to have a supposed national defense renaissance. How will it be possible to make and manufacture ammunition with such crippling high electricity prices?
ENERGY MARKET REALITIES POSE HURDLE FOR TRUMP’S COAL REVIVAL
Imagine for a moment a world where China is the largest producer of oil and gas. Do you think they would commit to letting you see their production figures, their storage volumes on a weekly basis, their demand figures? China is the second largest consumer and stockpiler of oil in the world, constantly hiding the ball and obfuscating data, creating opaqueness in an already messy and muddy demand market. China is the largest consumer of coal in the world, yet many associate China with green tech in the form of cheap solar panels, wind turbines, batteries, and electric vehicles they dump onto the world market. These products are not “fossil freedom.” The only thing they are free from is affordable, reliable, and dispatchable power generation.
The U.S. is both the leader of the free world and the largest oil and gas producer in the world. Fossil is freedom and the U.S. and Western nations rich in natural resources including Canada, the U.K., and bulk of Europe need to embrace the traditional fuels of oil, natural gas, and coal to increase economic security, national security, and energy security.
Trisha Curtis is a macroeconomist with expertise in U.S. shale markets, geopolitics and China. She is CEO of PetroNerds, host of the PetroNerds podcast and an economist for the American Energy Institute.