176
receive fierce opposition no matter how they are routed, and especially if they are
designated for exports. Anti-petroleum sentiment and opposition to gas pipelines
has grown so strong in Canada that Encana Corporation, an oil company headquartered for many decades in Calgary, Alberta, changed its name to Ovintiv, Inc. and
moved operations to the more “business friendly” environment of Denver, Colorado
as of January 2020.
Coal companies have also done poorly over the past decade, and several have
gone bankrupt. Electricity generation, the main market for coal in the U.S. has been
largely supplanted by natural gas and to some extent by renewables. Steel manufacturing, the other market for coal has also been usurped by natural gas. Demand for
coal has dropped to historic lows. The so called “war on coal” narrative promoted
by the mining industry to cast themselves as the victims of overly-zealous environmental regulations actually has little to do with the EPA, and a great deal to do with
competition from cleaner, cheaper, abundant, and easier-to-handle natural gas from
fracked shale. As might be expected, the coal industry is very strongly opposed to
fracking, but not for reasons that would appeal to most environmentalists.
The short answer to “what is the future of fossil fuel” is that these troubles are
but the tip of the iceberg. Oil and gas are plagued by overproduction, surplus inventories, low prices and reduction in demand. Cheap prices are the only thing that
keeps them popular. Production is not resilient and easily disrupted by economics,
weather, politics, and now also by pandemics.
Neither oil nor gas has made significant efforts in decades to find new markets.
The replacement of coal for electrical generation by natural gas in the U.S. was
almost accidental. The power companies discovered that once fracking had made it
both abundant and cheap, gas gave them greater efficiency than coal at a lower cost.
It certainly wasn’t due to aggressive marketing by the gas companies.
On a fundamental level, oil, gas, and coal are non-renewable, non-sustainable
resources that will run out eventually, perhaps in decades, certainly in a few centuries. The production and use of fossil fuel cannot continue indefinitely. An energy
transition is coming one way or another. Knowing that fossil fuel has a limited
future, wise government policy decisions made now could direct and encourage a
smooth transition toward cleaner, more environmentally-friendly, and sustainable
sources of energy. If business as usual continues unabated, however, the end of fossil fuel use will eventually be forced upon us very abruptly by the realities of geology and physics. Switching to new energy resources under these conditions is likely
to be disruptive, poorly-planned and possibly not very smart.
The transition to sustainable energy is struggling at the moment because fossil
fuel is just too cheap. A lot of this was due to the success of the fossil fuel revolution, where fracking allowed huge reserves of natural gas to be recovered from shale
and overloaded the market (Soeder and Borglum 2019). Petroleum from tight oil
resources is also overly abundant and has depressed prices. The cost of coal, on the
other hand, is low not because of a supply surplus, but because abundant natural gas
from shale caused already limited demand to fall sharply.
A former director of the DOE National Energy Technology Laboratory liked to
note that a truckload of topsoil cost more than a truckload of coal, making the point
9 Fossil Fuels and Climate Change
receive fierce opposition no matter how they are routed, and especially if they are
designated for exports. Anti-petroleum sentiment and opposition to gas pipelines
has grown so strong in Canada that Encana Corporation, an oil company headquartered for many decades in Calgary, Alberta, changed its name to Ovintiv, Inc. and
moved operations to the more “business friendly” environment of Denver, Colorado
as of January 2020.
Coal companies have also done poorly over the past decade, and several have
gone bankrupt. Electricity generation, the main market for coal in the U.S. has been
largely supplanted by natural gas and to some extent by renewables. Steel manufacturing, the other market for coal has also been usurped by natural gas. Demand for
coal has dropped to historic lows. The so called “war on coal” narrative promoted
by the mining industry to cast themselves as the victims of overly-zealous environmental regulations actually has little to do with the EPA, and a great deal to do with
competition from cleaner, cheaper, abundant, and easier-to-handle natural gas from
fracked shale. As might be expected, the coal industry is very strongly opposed to
fracking, but not for reasons that would appeal to most environmentalists.
The short answer to “what is the future of fossil fuel” is that these troubles are
but the tip of the iceberg. Oil and gas are plagued by overproduction, surplus inventories, low prices and reduction in demand. Cheap prices are the only thing that
keeps them popular. Production is not resilient and easily disrupted by economics,
weather, politics, and now also by pandemics.
Neither oil nor gas has made significant efforts in decades to find new markets.
The replacement of coal for electrical generation by natural gas in the U.S. was
almost accidental. The power companies discovered that once fracking had made it
both abundant and cheap, gas gave them greater efficiency than coal at a lower cost.
It certainly wasn’t due to aggressive marketing by the gas companies.
On a fundamental level, oil, gas, and coal are non-renewable, non-sustainable
resources that will run out eventually, perhaps in decades, certainly in a few centuries. The production and use of fossil fuel cannot continue indefinitely. An energy
transition is coming one way or another. Knowing that fossil fuel has a limited
future, wise government policy decisions made now could direct and encourage a
smooth transition toward cleaner, more environmentally-friendly, and sustainable
sources of energy. If business as usual continues unabated, however, the end of fossil fuel use will eventually be forced upon us very abruptly by the realities of geology and physics. Switching to new energy resources under these conditions is likely
to be disruptive, poorly-planned and possibly not very smart.
The transition to sustainable energy is struggling at the moment because fossil
fuel is just too cheap. A lot of this was due to the success of the fossil fuel revolution, where fracking allowed huge reserves of natural gas to be recovered from shale
and overloaded the market (Soeder and Borglum 2019). Petroleum from tight oil
resources is also overly abundant and has depressed prices. The cost of coal, on the
other hand, is low not because of a supply surplus, but because abundant natural gas
from shale caused already limited demand to fall sharply.
A former director of the DOE National Energy Technology Laboratory liked to
note that a truckload of topsoil cost more than a truckload of coal, making the point
9 Fossil Fuels and Climate Change