July 2021 – @alvaroriosroca – A recent visit to Corpus Christi, Texas (Gulf of Mexico) and its port, not to say the most active of all the ports in the USA, shows us the following panorama. An endless number of oil and natural gas drilling rigs docked at the port, with no possibility of any activity whatsoever.
In front of the platforms, thousands of thousands of propellers and wind turbines in storage (most of them imported from China, because that is where the panels and batteries of the global energy transition will come from), ready to be installed and thus provide intermittent electric energy, which does not emit into the atmosphere (which is not the same as not polluting) to the citizens of Texas and the USA.
This is the accelerated (fast track) energy transition that the Democrats are trying to implement in their country, and which we believe, due to the degree of ideologization, will have serious economic impacts in the North American country and also on a global scale in the decades to come. There is no greater damage you can do to human civilization than the ideological imposition of any subject or activity.
Let us remember what happened with Germany and let us keep in mind that Germany is not the USA. In the German country, in one way or another, the energy issue was ideologized and a plan similar to the one the Democrats are now trying to impose in the USA was implemented. That is, to impose an accelerated transition to green energy, with high subsidies and incentives that have resulted in failure.
The closure of coal and nuclear plants was forced. However, several coal-fired plants that had been shut down had to be restarted very quickly and a large amount of nuclear energy was imported from France. Subsidized and intermittent green energies drove up energy prices and did not present a security of supply solution.
We all agree on a global energy transition to cleaner fuels. The Clean Energy Revolution (Green New Deal) proposed by the Democratic Party should undoubtedly move forward, but not at the pace the Democrats want to impose in the USA. From what has been analyzed, it is not the result of an orderly transition with security of supply and that does not increase global energy costs.
Nobody, but nobody, wants expensive energy. The production costs of the different new clean technologies, although they have decreased, the transportation, distribution and commercialization infrastructure must be developed and billions of dollars are needed and it will take time.
In this transition scenario, natural gas is the fossil energy that cannot stop being produced or penalized for producing it. There is nothing to support intermittent energies as the German experiment has shown. In the USA, the ESG (Environmental Social and Environmental Risk) that is being promoted to penalize natural gas production will have a very strong impact on fracking activity and offshore exploration. Let’s imagine that fracking activity is further reduced as we are already seeing today. Henry Hub prices are already on a new horizon of 3 to 4 USD/MMBTU vs. the 2 to 3 USD/MMBTU they were for several years.
Many global LNG delivery prices are referenced to this marker and others are still referenced to Brent oil (which is also around 70 USD/barrel and rising). Several countries in the region such as Chile, Argentina, Panama, Colombia, Brazil and more recently Ecuador will have to pay higher prices for natural gas imported with this marker.
Protests over the high prices of LPG, diesel and gasoline are already beginning to take place in Peru, Colombia and other countries. They will impact importers such as Chile, Paraguay, Uruguay, Central America and why not say it to Mexico, Venezuela and Bolivia that import more and more petroleum derivatives.
Energy transition yes, but not ideologized and accelerated. What the democrats are trying to do will have very strong consequences for their economy and also planetary disruptions that will have a greater impact on those who have the least. We repeat, what the democrats are trying to do in the energy issue will have serious consequences.
* Former Minister of Hydrocarbons of Bolivia and current Managing Partner of Gas Energy Latin America.