The Resurgence of Fossil Fuels: Oil Demand Has Surged in Recent Months
Illustrative photo of oil drilling on land. Photo: The Times of Israel
On Mar. 13, 2023, President Biden approved the $8 billion oil drilling Willow project on the Alaskan North Slope. While this move disheartened environmentalists and directly contradicted a promise he made on the campaign trail to “end new oil and gas drilling on public lands and waters,” it is not an isolated incident.
Just two weeks later, 1.6 million acres of federal water in the Gulf of Mexico were sold by the US government to private companies for oil and gas drilling leases. In fact, while the Willow Project appears to be a huge step backward on climate progress, it only accounts for one-third of US oil extraction and is only a small fraction of the hundreds of new oil and gas extraction projects approved worldwide over the past year.
Over the course of the past few years, the world seemed to be making major progress on clean energy. During the pandemic, demand for oil dropped and renewable energy prices were decreased to levels that rivaled oil and gas.
For example, solar energy costs between 3 and 6 cents per kilowatt-hour while electricity from fossil fuels ranges from 5 to 17 cents per kilowatt-hour. Additionally, policies were created by various governing bodies to address climate concerns and incentivize more clean energy production.
The Biden administration passed the most progressive climate legislation in US history, the Inflation Reduction Act of 2022, which incentivizes clean energy, electric cars and homes, and invests in green technology. The UN called for a renewable energy push, and the EU passed the REPowerEU plan to ramp up clean energy.
However, when the global economy came roaring back, it brought with it a revival in demand for oil, extending the fossil fuel timeline. Fossil fuels became profitable again as energy was needed, and it was needed immediately. Companies shifted their energy plans.
Shell decided to leave its 2022 renewable energy budget as is instead of increasing it, and BP dropped its goal of cutting 40% of emissions by 2030 to just 25%. For BP, the resulting surge in stock prices only served to solidify evidence of continuing demand and profitability of fossil fuels.
Additionally, the Russia-Ukraine war brought the world to the first “global energy crisis.” While this brought discussion and policy on investing in clean energy, it created a scramble to acquire energy security, which meant securing oil and gas.
Representative photo of carbon dioxide emissions polluting the air. Photo: IEA Reports
There are trillions of dollars being invested into fossil fuel infrastructure and production, despite the IPCC warning we must begin declining reliance on oil and gas sharply now if we hope to avoid the worst of climate change.
There are new oil fields approved worldwide, including in Guyana, Brazil, Uganda, and the United States. And these are not just temporary solutions for the energy crisis, they are continuing investment in infrastructure for the future of fossil fuels, as seen with Qatar's plan to launch the world’s biggest gas production facility in 2025.
The environmental ramifications of the resurgence of fossil fuels will be tremendous. The oil and gas production projects approved between 2022 and 2025 could cause 70 gigatons of carbon dioxide to be emitted.
Projects like the Willow Project, which actually make up only a fraction of oil drilling, will generate enough oil to release 9.2 million metric tons of carbon pollution per year.
Unfortunately for renewable energy, the oil demand is expected to continue to rise in 2023, reaching up to 101.7 million barrels per day, and thus profitability remains for fossil fuels.
Oil-producing countries and companies are unlikely to take the initiative to reduce oil and gas production as long as the demand and consumption remain. Thus, if we hope to avoid climate change, we must figure out a way to reduce this demand for oil, and quickly.