Russia’s invasion of Ukraine and the resulting oil market tumult are prompting a global rethink of fossil fuel reliance that progressive Democrats want to seize for a renewable energy “moonshot.” But some of the party’s climate hawks also recognize that the U.S. may have to do something they find abhorrent: increase drilling.
Q4 2021 hedge fund letters, conferences and more
There is no immediate solution for stabilizing prices and weaning European countries off Russian oil and gas. Bolstering U.S. production by enough to affect global supplies would take at least six months, while widespread availability of alternative fuels is still years away, even with hefty government investment.
Representative Ro Khanna, a California Democrat, acknowledged that progressives are confronted with a quandary.
“In the short term, yes, we need domestic increase in oil production,” Khanna said in an interview. “And that obviously, is going to not be consistent in the very short term with climate aspirations. But I think over the long term, we can still have our climate goals.”
Yet the issue has created some divisions among lawmakers who have largely maintained a united front on climate.
Representatives Pramila Jayapal of Washington State, the Congressional Progressive Caucus chair, and Alexandria Ocasio-Cortez of New York oppose increasing U.S. oil production. Ocasio-Cortez accused fossil fuel companies for making a “cash grab” by pushing for more drilling, a move she says won’t bring down prices in the short term.
Oil prices had been on a steady climb into this year as demand rebounded from the lows of the coronavirus pandemic and as inventories across the world shrank in the absence of new supply.
Russia’s assault on Ukraine sent shock waves across the market and benchmark prices surging above $130 a barrel, highs not seen in more than a decade. If Russian supplies continue to be disrupted, Brent crude could end the year at $185 a barrel, JPMorgan Chase & Co. analysts said earlier this month.
The surge has heightened Americans’ anxieties about inflation, a major concern for Democrats as they prepare to face the voters in November’s midterm elections.
Read the full article here by Jarrell Dillard, Advisor Perspectives.
