Ukraine: Can America solve the crisis with a flood of exported oil?

A Digest editorial

“U.S. exports limit price increases and help check disruptive behavior by the likes of Russia and Iran,” says the headline in the Wall Street Journal this evening, from a new column by Dan Yergin. “The shock absorber for averting crisis is “spare capacity,” Yergin writes, “the sum of the potential output from wells that is currently not produced but can be turned on during a disruption. Spare capacity has shrunk as the rebounding world economy has pushed demand up and some oil-exporting countries, because of underinvestment, haven’t been able to return to former production levels.”

We agree on the need for spare capacity, and there is good news. 

The wind is still blowing, the sun is still shining, crops are still being harvested and leaving plenty of waste residue to make good fuels. If there is any truth to the idea that American power and prosperity is threatened by the geopolitics of fossil fuels, those who have worked against the adoption of renewable fuels and power are the authors of our current misfortunes.

It is time to recognize that the direction that the US has taken — away from fossil fuels, their externalities, and the resource wars they lead to, is the right one.  Also, that slowdown in US fossil energy investment has more to do with disinterest in New York than disdain in Washington, DC. A new generation of consumers and investors have arrived, who believe they have more to fear from climate change than from China.

Our current crisis is not the product of energy policy nor will be solved by it. This is about Russia and China getting ambition, judging that Europe will fold, that America will cut and run. America’s retreat from Kabul — and retreat from the world stage since 2009 — appears more impactful on Russian and Chinese thinking, than the waning interest in spare petroleum capacity from investors. 

In building renewables, we build refining capacity and that is something the world needs more of, too. It will take time, but the effort is worth it. For the time present, we are in difficulties over Ukraine and there’s no sense in minimizing the dangers. Actions are required, perhaps tough ones. Here’s a starting point for action: America needs to simmer down, engage in a better dialogue, and stick to something. Playing the “drill, baby, drill” card is just stirring the pot.  

Meanwhile, the Biden Administration might study up on the Bush 41 presidency, and assemble a unified, determined coalition of the willing first, They can make dramatic announcements later.

Fossil energy exports did not defeat the Taliban, restrain Russia, end the Cold War, prevent the rise of China, or bolster the spine of Europe. They accomplished many things, but not those. It’s time to build a different kind of spare capacity.