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As energy prices soar, some states press on with anti-fossil fuel strategies at odds with reality. March 10, 2022
Economy, finance, and budgets
Infrastructure and energy
Politics and law

The war in Ukraine has sent world oil prices soaring and the Biden administration scrambling to find new energy supplies. Even Tesla founder Elon Musk, whose business model is built on supplying Americans with luxury electric-powered vehicles, has said that the United States needs to increase oil and gas production. “Extraordinary times demand extraordinary measures,” Musk recently tweeted.

But apparently the times haven’t been extraordinary enough to deter some states from their war on fossil fuels. Governors and legislators in several states are plunging ahead with a pipeline ban, new taxes, and added regulatory oversight—all aimed at raising prices further and weaning Americans off natural gas and oil.

Michigan governor Gretchen Whitmer is pursuing closure of a major oil and gas pipeline, the Enbridge Line 5, which carries supplies from Western Canada to energy users in five midwestern states. Whitmer says the line, in operation since 1953, would present an environmental problem if it were to rupture in the portion that runs underwater beneath the Straits of Mackinac connecting Lakes Michigan and Huron—though that hasn’t happened in nearly 70 years. To allay fears, the pipeline owner, Enbridge, wants to move it into a tunnel dug below the straits, but Whitmer has decreed instead that the line be shut. A new study estimates that individuals and businesses in the five affected states would spend $23 billion more on energy costs over the next five years if the line closes, on top of any additional energy costs resulting from a sustained war in Ukraine. Hardest hit would be users in Michigan and Ohio, who would each sustain about $2 billion a year in new costs.

Pennsylvania governor Tom Wolf has been trying for four years to join the Regional Greenhouse Gas Initiative, a consortium of states that agree to tax power plants and funnel the revenues into cleaner energy sources. So far Republicans in Harrisburg have blocked him, arguing that the estimated $410 million in taxes on the state’s power plants would be passed on to consumers in the form of higher prices. Opponents also worry about the implications of Pennsylvania, which produces more natural gas than any state except Texas, joining a group that levies extraordinary taxes on fossil fuels. Pennsylvania Senate president Jake Corman, a Republican, said that doing so would “send a terrible message across the country” and result in disinvestment in the state’s fracking industry at a crucial time in world affairs. But Wolf is forging ahead, arguing last week that he did not need legislative approval to join the group and levy its taxes on state producers. Meantime, Virginia’s new Republican governor Glenn Youngkin is trying to remove his state from the group. “Simply stated, the benefits of RGGI have not materialized, while the costs have skyrocketed,” Youngkin said in an executive order.

Another state that relies heavily on oil and gas production, Colorado, is sharply increasing regulatory oversight of the industry at enormous costs. The state’s Democratic legislature granted extensive new oversight powers to the Colorado Oil and Gas Conservation Commission in 2019, and last week the group announced that it was vastly increasing financial guarantees that oil and gas well owners must make to operate wells. The new costs, ranging from 10 to 30 times larger than the former financial guarantees, add to regulatory expenses that already amount to some $500 million a year for producers. Industry advocates have argued that the higher expenses could cost the state tens of thousands of energy jobs.

California has led the way, so to speak, among states raising energy costs for residents, including by setting its own Low Carbon Fuel Standard, aimed at reducing carbon emissions from cars and trucks, well beyond federal fuel standards. Enhanced fuel standards like those in California come at a heavy price, opponents argue, adding as much as 17 cents a gallon to the price of gasoline. No matter. Other states are rushing to join the California parade. New Mexico only narrowly avoided a new clean air standard a few weeks ago, when its House of Representatives deadlocked on a bill in support of the measure. New Mexico’s Senate has passed similar legislation, and Governor Michelle Grisham says that she supports it. Advocates are working to flip one more vote in the House to win passage. The bill is necessary, its sponsor says, because the state is “facing catastrophic climate change;” one of its chief opponents points out, however, that the more stringent, costlier fuel standards will have minimal effect on carbon emissions, something like “squirting an eyedropper of green liquid into Niagara Falls and measuring how much greener the water is at the bottom.”

With fuel prices soaring, the Ukraine war has placed new attention on Russia’s efforts over the years to fund anti-fossil-fuel “green” groups in Western Europe and the U.S. Their lobbying has helped deepen the world’s dependence on Russian fossil fuels while sapping the U.S. oil and natural gas industry of its momentum—even as the shortcomings of green technologies become more obvious, with power outages and rolling blackouts in places like California.

Back in 2017, a congressional committee quoted a former secretary general of NATO who described Russia’s “sophisticated information and disinformation operations, engaged actively with so-called non-governmental organizations—environmental organizations working against shale gas—to maintain dependence on imported Russian gas.” Even Hillary Clinton, as Secretary of State, acknowledged the impact of Russian money being used to finance anti-fracking campaigns, the congressional report said. It also quoted media sources identifying California foundations that fund environmental causes acting as “pass-through” entities funneling Russian money to groups like the Sierra Club and the League of Conservation Voters Education Fund.

“I understand how Russian propaganda about climate change successfully suppressed domestic energy production in the United States until now,” political commentator and cartoonist Scott Adams wrote recently. “What I don’t understand is why it is still working. Must be massive corruption or massive cognitive dissonance.”

Part of the answer may be that some politicians have staked so much of their political identity on the green agenda that to backtrack now would be to admit that they’ve been dangerously naïve. It seems far easier to continue to pursue strategies at odds with reality—even as the price, both economic and otherwise, for doing so grows higher by the day.

Photo by KEREM YUCEL/AFP via Getty Images

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