No Oil Bailout Is Worth the Green New Deal

By Kevin D. Williamson

Thursday, May 14, 2020

‘Oil is dead.” So goes the wishful thinking of the Left in Canada. And not just in Canada.

Canada’s oil industry, like others around the world, has taken a beating: Before the coronavirus epidemic, prices already were low and declining, with U.S. shale producers fracking the world into oil abundance, sending prices down from over $100 a barrel in 2014 to less than $30 a barrel just two years later. The failure of the joint Saudi–Russian effort to cut production sent prices down even more, and then came the coronavirus epidemic, which cut demand off at the legs and sent oil prices all the way down to $0.00 and then briefly into negative territory as oil traders looked to escape paying storage costs for the unprofitable commodity.

In Alberta, the Canadian energy heartland, oil is the economic lifeblood. But efforts led by Prime Minister Justin Trudeau of the Liberal Party to provide emergency assistance to the oil industry — just as his government is assisting many other industries — ran into resistance from the Left. Bloc Québécois leader Yves-François Blanchet, engaged in textbook question-begging, insists that oil is “condemned” and that the government should not provide any assistance to firms “that will not be self-sufficient in any time in the future.” Elizabeth May of the Green Party put it bluntly: “Oil is dead.” She suggested funding a transition program for Alberta’s energy-sector workers and then letting the oil business die of not-quite-natural causes.

Unlike their Canadian colleagues, the leaders of the U.S. oil industry aren’t really looking for help. They’ve been through a price crash before — it was the stupendous output enabled by the shale revolution, not the epidemic, that brought down oil prices to begin with — and they learned to adjust. The big oil companies have diversified operations, and they do not live or die by the daily price of crude.

“Any effort by government will come with a very high price from the Democrats,” says Thomas Pyle of the American Energy Alliance. “They’ll want to trade that for parts of the Green New Deal, which is a bad deal for us.” Pyle says that some producers, especially smaller firms, might benefit from the same sort of assistance offered to businesses in any other industry, but that protectionist measures such as tariffs and subsidies are help that’s not wanted. Any help that is offered, he argues, should be general rather than industry-specific.

But the true believers of the Left have a very industry-specific view of the oil business — they hate it and wish to see it destroyed. It is not only Canadian progressives eager to see an entire industry go under: The Obama administration took roughly the same view of coal, a perennial bogeyman for the Left.

Conservatives have pointed to the suffering and economic ruination of the coronavirus quarantine as a preview of the so-called Green New Deal, which is less a legislative proposal than a slop bucket into which almost any left-wing priority can be poured. It may be necessary, conservatives say, for government simply to mandate that important economic activities come to a halt, but this is what it looks like. The Left, in turn, insists that what is good for a virus crisis in the here and now is good for a climate crisis at some point in the future, and that with the right leadership — always that — the command-and-control policies adopted as emergency measures during the epidemic can be reconstituted as a worldwide decarbonization project. “Give us the power of the Trump administration,” they say, “and we’ll do better with it than Donald Trump did.” Conservatives hear Rahm Emanuel whispering about never letting a good crisis go to waste.

The progressives are absolutely certain about the mandate, as they tend to be, but remain a little fuzzy on the details even as the new emergency-powers rhetoric sweeps the Democratic Party from the top to the bottom. Arn Menconi, a Democrat running for state office in Colorado, insists that the epidemic “has proved we can afford the Green New Deal.” The “proof” includes unemployment expected to peak above 20 percent and an unprecedented spike in federal debt, which might easily be taken for proof of the opposite. Joe Biden is singing from the same hymnal as the Democratic Socialists of America, with the presumptive Democratic presidential nominee promising “an FDR-size presidency,” as New York magazine put it, and endorsing expensive proposals for “immense green enterprises.” Biden has hardly even snorted in the direction of accounting for the costs of all that, probably because his advisers have realized that he does not have to: This is to be a moral crusade, pure and simple, begun in a fog of terror and anxiety.

The political opportunism here is impossible to miss. Helen Mountford of the World Resources Institute told Bloomberg that the current crisis presents “a great opportunity now to transition more quickly.” The political strategy is to present the coronavirus epidemic and climate change as a continuity of crisis. And so Mountford describes the possibility of getting the economy up and running again without imposing a new political discipline on it as “coming out of one health crisis and trying to boost the economy by leading us into another health crisis in terms of air pollution and climate change.” There is a kind of magical transference at work there: The Left’s climate-change story has been around for a long time, and, despite efforts to inflate global warming into the dispositive and final crisis of capitalism, the world has stubbornly declined to treat it as an existential threat and adopt the hysteria and obedience that the Left demands. This is true not only of the purported cowboy capitalists of the United States or right-wing populists. It is Justin Trudeau who is working to save Canada’s oil industry, not some snowbound northern reincarnation of Clayton Williams. “If we are to move forward in transforming our economy towards lower emissions and clean processes, workers and innovators in Alberta and across the country in the energy sector are going to be an essential part of that transition,” Trudeau tells Global News.

Beating back Green New Deal shenanigans and affirming the role of the oil-and-gas industry ought to be a political dunk for the Trump-era Republican Party. Setting aside the complicating fact that U.S. energy independence is really North American energy independence — Canada and Mexico are our top two national suppliers of petroleum, which the United States continues to import because many of our refineries still are optimized for relatively high-sulfur imported oil rather than the “light sweet” stuff from Texas — this is an opportunity so simple and clear that even Republican candidates for public office should not be able to get it entirely wrong. It pits a successful real-world industry creating and sustaining hundreds of thousands of jobs — many of them in swing states such as Ohio and Pennsylvania — with real-world names and faces attached to them against a pet project of the Davos set, one that has achieved quasi-religious status among affluent elites but hardly registers at all in the polls: In the January Gallup survey of top issues informing voters’ choices in the 2020 election, climate change was second from last, ahead only of gay rights and far behind such concerns as the budget deficit, taxes, and immigration. The question of energy vs. the Green New Deal is a question of real things you can see vs. possible things someone might imagine, your warm house vs. the warm fuzzy feeling of self-righteousness, people you know vs. people you don’t.

“We think these decisions should be made on the basis of financial accounting, not ideological,” says Frank Macchiarola of the American Petroleum Institute. The oil industry has generally supported policies such as the CARES Act and efforts to inject liquidity into the financial markets, but has resisted industry-specific measures as being likely to distort markets and impede long-term recovery. “We’re not advocating additional policy measures, or any economic or financial relief, directly targeted toward the oil and gas industry,” Macchiarola says. “We believe this is a challenge across the economy.”

The current situation is painful, but the U.S. oil industry believes that in the long term the numbers are on its side: With a growing world population and a growing global middle class, energy consumption is expected to increase by as much as 20 percent in the next 20 years — and half of that energy will come from oil and gas. That matters for the cost of filling up your F-150, but it also matters for the diplomatic, security, and trade position of the United States. The day before yesterday, the big worry was our “dependence on” or “addiction to” despised “foreign oil.” Technological innovations have made the United States the biggest oil and gas producer around, and our short-term problem right now is that we have more oil than anybody wants and nowhere to put it. The problem of depletion has become the problem of superabundance. That’s a better problem to have.

Canada is likely to end up doing something for its oil producers. But the situation in Alberta is an excellent illustration of why you do not want major industries to be dependent upon the whims of politics. Even after the long-term decline in prices from the shale boom, the shock of the Saudi–Russian price war, and the cratering demand from the coronavirus shutdown, the major oil producers in the United States are, for the most part, asking to be left alone, or for oil businesses to be treated like any other businesses. There is value in that kind of resilience, which should be even more obvious in uncertain times such as these.