{"id":317234,"date":"2024-04-10T19:28:43","date_gmt":"2024-04-10T17:28:43","guid":{"rendered":"https:\/\/climatescience.press\/?p=317234"},"modified":"2024-04-10T19:28:45","modified_gmt":"2024-04-10T17:28:45","slug":"conflict-of-energy-forecasts-saudi-aramco-vs-international-energy-agency","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=317234","title":{"rendered":"Conflict of Energy Forecasts: Saudi Aramco vs. International Energy Agency"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From Watts Up With That?<\/a><\/p>\n\n\n\n

By Rupert Darwall<\/a><\/p>\n\n\n\n

Fifty years ago, the economies of the West were reeling from the effects of an oil embargo imposed by the Organization of Petroleum Exporting Countries (OPEC) in response to the United States providing emergency military aid to Israel in the October 1973 Yom Kippur war. By January 1974, the embargo had nearly quadrupled the price of oil, driving up inflation and ending the postwar economic expansion.<\/p>\n\n\n\n

The Nixon administration responded to this first energy crisis in two ways. In November 1973, President Nixon announced<\/a> Project Independence: by 1980, America would meet its energy needs from its own energy resources. Though it took nearly four decades longer than Nixon envisaged, the U.S. finally became a net energy exporter<\/a> in 2019, thanks to the shale revolution. In December 1973, Secretary of State Henry Kissinger proposed<\/a> the formation of an energy buyers\u2019 group to counterbalance the market power of the oil exporters, led by Saudi Arabia, an initiative that came to fruition with the setting up of the International Energy Agency (IEA) in November 1974.<\/p>\n\n\n\n

Half a century later, something strange happened. The roles ascribed to championing producer and consumer interests suddenly reversed. At last month\u2019s CERAWeek in Houston, Saudi Aramco CEO Amin Nasser poured cold water on the forced march of the energy transition, telling<\/a> the conference, \u201cthe hopes and ambitions of 8 billion energy consumers around the world are at stake.\u201d The message from consumers, he said, is that they want energy that protects the planet and<\/em> their pocketbooks, \u201cwith minimal disruption to supplies and their daily lives.\u201d<\/p>\n\n\n\n

In the real world, Nasser pointed out, the energy transition is visibly failing despite the expenditure of $9.5 trillion over the last two decades. So far this century, the share of hydrocarbons in the global energy mix fell from 83 percent to 80 percent, while wind and solar supply less than 4 percent of world energy. Despite its marginally lower relative share, the absolute demand for hydrocarbons grew by almost 100 million barrels per day of oil equivalent. \u201cEven coal is at record highs,\u201d Nasser unfashionably observes.<\/p>\n\n\n\n

Nonetheless, oil consumption in developing countries ranges from less than one barrel to below two barrels per person per year, compared with nine barrels for the EU and 22 barrels for the U.S. \u201cThe energy transition narrative will increasingly be written by the Global South,\u201d Nasser points out. This leaves plenty of headroom for growing hydrocarbon demand. \u201cPeak oil and gas are unlikely for some time to come, let alone [in] 2030,\u201d Nasser concludes.<\/p>\n\n\n\n

The Biden administration moved quickly to dismiss Nasser\u2019s analysis. \u201cWell, that is one opinion,\u201d commented<\/a> Energy Secretary Jennifer Granholm. \u201cThere have been other studies that suggest the opposite, that oil and gas demand and fossil demand will peak by 2030.\u201d The other studies Granholm refers to are those by the IEA under its executive director, Fatih Birol. Most controversially, in 2021 the IEA published<\/a> \u201cNet Zero by 2050,\u201d which claimed that investment in new oil and gas fields was no longer needed.<\/p>\n\n\n\n

A June 2023 report<\/a> by the Energy Policy Research Foundation (EPRINC) in collaboration with the RealClear Foundation shows that the IEA\u2019s net zero analysis is unrealistic, internally inconsistent, and often supports the case for increased<\/em> hydrocarbon production. Even though renewables allegedly drive oil and gas back into the ground through market forces, the IEA\u2019s net zero scenario sees U.S. electricity prices rise by 50 percent on average by 2050. As for net zero being a counterbalance to OPEC: the cartel\u2019s share of the global oil market would rise from 37 percent to 52 percent in 2050, a level \u201chigher than at any point in the history of oil markets.\u201d If oil demand continues to rise, but American and other non-OPEC producers cut their investment in new oil and gas fields, EPRINC reckons that OPEC\u2019s share would rise to 82 percent. Who now is more in favor of boosting OPEC\u2019s market share \u2013 Saudi Arabia or the IEA?<\/p>\n\n\n\n

Three days after Nasser\u2019s Houston speech, Birol wrote an op-ed<\/a> in the Financial Times replete with falsehoods and misleading claims. It\u2019s now cheaper to build onshore wind and solar than new fossil fuel plants, Birol maintains. But any accounting of wind and solar must incorporate the costs of their intermittency and their inability to match supply with demand, meaning that each megawatt of wind and solar capacity requires a matching megawatt of coal or natural gas.<\/p>\n\n\n\n

The cost of electric vehicles (EVs) is plummeting, making a U-turn away from them improbable and impractical \u2013 or so Birol would have us believe. Birol might have a word with recently fired<\/a> Hertz CEO Stephen Scherr, who joined the car rental giant only two years ago after nearly 30 years at Goldman Sachs. Scherr followed the green fashion and made a massive bet on EVs. Customers didn\u2019t like them, they\u2019re costly to maintain, and their value plunged when Tesla started a price war, leading Hertz to sell around one-third of its EV fleet and take a $245 million write-down. So much for Birol\u2019s \u201cno EV U-turn.\u201d<\/p>\n\n\n\n

Birol points to China, the world\u2019s largest consumer of coal, as the clean energy superpower for its domination of the supply of solar panels, wind turbines, and EVs. \u201cRegardless of where they stand on climate policy,\u201d Birol argues, \u201cif countries want to compete with China in the industries of the future, they need to double down on clean energy plans, not dial back on them.\u201d This is economic nonsense, as every student of Adam Smith (specialization) and David Ricardo (comparative advantage) knows. Just because you might consume a lot of something doesn\u2019t make you good at producing it. Ask the Germans. They were promised that their trillion-euro Energiewende<\/a> would create thousands of green jobs. The green jobs did appear \u2013 in China.<\/p>\n\n\n\n

\u201cThe IEA has become, so to speak, our armed wing for implementing the Paris agreement,\u201d France\u2019s President Emmanuel Macron declared<\/a> two months ago. It is the clearest possible admission that the IEA has morphed into a green propaganda outfit and means that the IEA should not be relied upon to provide trustworthy, unbiased analysis. Self-evidently, the IEA no longer performs the function it was created for nearly fifty years ago. For that, better listen to Armin Nasser, not Fatih Birol. That, in turn, raises the question of what to do about the IEA should Donald Trump win a second term. There\u2019s a one-word answer: withdraw.<\/p>\n\n\n\n

Rupert Darwall is a senior fellow of the RealClear Foundation and author of The Folly of Climate Leadership: Net Zero and Britain\u2019s Disastrous Energy Policies<\/a>.<\/em><\/p>\n\n\n\n

This article was originally published by RealClearEnergy and made available via RealClearWire.<\/strong><\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Fifty years ago, the economies of the West were reeling from the effects of an oil embargo imposed by the Organization of Petroleum Exporting Countries (OPEC) in response to the United States providing emergency military aid to Israel in the October 1973 Yom Kippur 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