President Obama has enacted a number of important policies — such as stronger fuel efficiency standards and the Clean Power Plan — that chip away at the demand for fossil fuels, even as he has continued policies that expand their supply. This is a big contradiction, but some commentators have put forth the idea that it is “futile” to try to halt the growth of fossil fuel supply because markets will adapt to replace that supply somewhere else, cancelling out any emissions reductions.
That argument is thoroughly dismantled in this highly recommended post from Oil Change International. As the post makes clear, the economic argument about futility is on shaky grounds. In normal markets, expanding supply leads to lower prices and hence greater consumption (and greater emissions). The story goes that oil markets don’t work like that because major players like OPEC have used their cartel power to keep overall production and prices steady. But the events of the past year show that OPEC has abandoned that strategy and the oil market has in fact responded to increased supply by dramatically lowering prices.
Fossil fuel extraction projects involve high up-front costs that can lock in dirty energy infrastructure for decades. Once that infrastructure is built, the marginal costs to pump the next barrel of oil are relatively small. This means that once a project is started it can be very hard to get rid of because oil companies will fight to recoup their investment by pumping oil for decades. Therefore the time to stop misguided oil projects is now, before critical investments are made.
Most importantly, campaigns against fossil fuel supply have helped build a powerful movement for climate justice that is already achieving real policy changes. A movement of people concerned with fracking, oil trains, coal exports, tar sands pipelines, Arctic drilling and more have taken to the streets (and waterways) in recent years to demand a faster transition to a cleaner and more just economy.
At the end of the day, Shell is an enormous oil company trying to maximize their profits. A big discovery in the Chukchi would be good news for their stock price but bad news for the rest of us. In Alaska, President Obama called on the nations of the world to do more to tackle climate change. It would take strong leadership to pledge to end nonsensical extraction of federal fossil fuels, but such a move is within the President’s power and would greatly strengthen the message he takes to the Paris climate talks this fall.
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