Domestic fossil fuel industries in crisis

The domestic U.S. fossil fuel industry is in trouble.  Hundreds of thousands of jobs are at stake.  President Joe Biden will face a choice: try to save them or replace them with something better.  There is a good article in Dissent magazine about this.

In 2016,  [Donald] Trump charged Barack Obama with waging a “war against coal” and promised to bring the sector back to its former glory.

He manifestly failed to do so, but his rhetoric still proved an effective bludgeon against Hillary Clinton in Appalachia during the campaign.  In fact, more coal plants were retired under Trump than in either of Obama’s terms in office.

U.S. coal production had already been declining for years, as cheap natural gas edged it out of the energy mix used in power plants.  Coal jobs had been disappearing for years even before that, as the industry replaced workers with machines.

At its peak in the 1920s, the industry employed over 800,000 people in the United States.  Today, only about 42,000 coal mining jobs remain.

As coal companies have gone bankrupt, they have shed their pension obligations to former workers, leaving the federal government to pick up the bill.  Last December, Congress bailed out nearly 100,000 coal miners’ pensions.

In the long run, this was a good thing, not a bad thing.  Of all the important sources of energy production, coal is the dirtiest.  It generates the most air and water pollution and the greatest hazards to its workers’ health and the public health.  Still, that is no consolation if your livelihood depends on coal.

As energy researchers point out, coal is the canary for other fossil fuel industries. Oil isn’t on quite the same decline yet, but it’s headed in that direction.

The American fracking industry has expanded rapidly in the past decade with the use of cheap credit, and with encouragement from Obama, who boasted of making the United States the world’s leading oil producer.

But the shale oil that fracking produces is only profitable when oil prices are relatively high, and the overproduction of shale gas has glutted global markets.

The combination of a pandemic-spurred decline in demand and a price war between Saudi and Russian producers sent oil prices plummeting this year, resulting in a record number of bankruptcies among American oil producers.  An estimated 107,000 oil industry workers lost their jobs in the United States this year.

While some of those may come back as the economy recovers (whenever that is), many will not. Some energy analysts suggest that the world may have hit “peak oil demand,” as renewable energy begins to replace fossil fuels.  The Houston Chronicle reports that oil production employment in Texas “may never fully recover” as the overextended shale oil sector consolidates and learns to get by with fewer workers.

Source: Dissent Magazine

The fact that the fracking industry, or any other fossil fuel industry, is unprofitable doesn’t necessarily mean it will cease operations.  The economic incentive for an industry in the red is to do everything possible—in this case, extract every little globule of shale oil and gas—to minimize the loss.

Of course, moving away from fossil fuels is a good thing, not a bad thing—also overall.  Global warming is not imaginary.  Greenhouse gas emissions are real.  But what about all the people whose jobs depend on oil and gas?

We need something like a Green New Deal to create useful and sustainable jobs to replace jobs lost.  Without some such program, Americans will be forced to choose between short-run economic survivable and a livable planet in the long run.

The path of least resistance for President Biden will be to do as little as possible and keep his promise to big donors that there won’t be any fundamental change. 

Alternatively, he could use executive orders and federal regulation to curb the burning of fossil fuels.  There are many things he could do without asking permission of Congress. 

Either way, he would have to decide whether to prioritize protecting workers’ livelihoods or the environment.

A Green New Deal would avoid these tradeoffs.  It is not as if there is a shortage of needful things that can be done but aren’t being done.

What would a Green New Deal consist of?  It should first of all consist of incentives for a renewable energy.  One good way to do this would be for the U.S. government to become a purchaser of renewable energy. 

In the 1930s, the U.S. government helped create a domestic airline industry by giving out contracts for airmail delivery.  It could could help create a green energy industry by buying green energy for its own needs.

Second, a Green New Deal should mean spending on infrastructure to repair or prevent damage done by weather-related disasters—floods, storms, fires and droughts.  I think there is a role for a Disaster Relief Corps to provide emergency assistance when needed.

Third, a Green New Deal should mean putting people to work on needed public works and infrastructure, just like the New Deal of the 1930s.

I believe a Green New Deal that put large numbers of Americans to work would be very popular and a big vote-getter.  

But the economic elite would fight it, just as their counterparts in the 1930s fought the original New Deal.

Biden couldn’t enact it by decree, even if he wanted to, and he probably couldn’t get it through Congress, even if there is a Democratic majority in the Senate, as things stand right now.

What it would take is a grass-roots movement powerful enough to pressure Biden to back it and the Congress to enact it.  I think an environmental movement focused on job creation has great potential.

LINKS

Will Biden Be the First Climate President? by Alyssa Battistoni for Dissent.  (Hat tip to Bill Harvey)  “Biden can and use executive action to reduce emissions.  But we need policies that can build a popular base for climate action, connected to material improvements in people’s lives.”

How the Fracking Revolution Is Killing the Oil and Gas Industry by Justin Mikulka for DeSmog Blog

Images via Atlantic Council, DeSmog Blog.

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