According to Britain’s The Guardian, it is suggested that Shell Oil Company, the same company that attempted to drill offshore oil wells here in Alaska, should be nationalized and turned into a renewable energy company. Naturally, this raises the question of how this actually stops global warming and what the taxpayer will have to pay once the renewable energy strategy goes into deficit.
As an upcoming book by David R. Mores points out, there are two markets in climate change activism: the economic market and the political market. Clearly, the economic market shows a willingness of consumers to use the cheapest possible energy, at least in the short term, to transport themselves, to transport their products and the inputs of their products. So far, the cheapest way to do all of this is to use fossil fuels, which is why most consumers are so keen to use them. In the political market, activists have been unable to implement enough policies to slow the use of fossil fuels, or at least enough to their liking. Again, this is because most voters choose short term economic benefits.
All that remains is to attempt to disrupt the middle of the fossil fuel market between the fossil fuel mining rights holders, who sell the mining rights to fossil fuel mining companies, and the public buying fossil fuels. , which always chooses to use these fuels. The middle strategy is to try to vote on boards of directors to stop mining companies. This also includes shutting down projects like the XL pipeline. Now, one of the latest attempts for this intermediary strategy is to nationalize Shell Oil Company in order to transform it from an oil and gas extraction company into a green energy company.
Such a strategy may indeed entail a little less effort to find, extract and commodify fossil fuels and thus increase the costs of fossil fuels by a certain small amount. This might be enough to reduce usage somewhat. It could also mean a bit more investment in renewables, which would develop these fuels and technologies faster than not.
Yet such a strategy is unlikely to be the most effective method. If you want to reduce the production of fossil fuels, all you need is a set of G7 or G20 policies to get OPEC + to reduce its production by 10% or 20%. And if you want more renewable technologies, all you need is government sponsored research based on competitive bids to multiple contractors for all renewable technologies, and even nuclear technologies. Such government subsidies are more effective in successfully creating new technologies than by subsidizing a state-run company (especially if it does not have an incentive mechanism). For example, look at Space X, which received government funding and developed better rockets. Giving competitive contacts to government for different energy technologies is not a bad idea.
Still in the grand scheme of things, cheaper oil and gas can induce greater economic growth in general, which may induce greater technological improvement. Cheaper oil and gas can also lower mining costs. Reducing mining costs is important for most renewable energy technologies to reach cheaper rare earths and other minerals needed in all of their technologies, such as copper, lithium and lanthanides. Of course, you also want to make sure that the oil and gas is extracted in an environmentally friendly way.
Alternatively, there may be a way to operate such a national oil company. Having a properly incentivized, profit-maximizing state-owned oil company, expanding Alaska mineral rights, developing oil prospects in the ANWR, offshore, and elsewhere in Alaska. This could be a way to free those mineral rights using state rights and a bonus incentivizing the CEO to run such a business. But unlike AIDEA, it should have a profit-driven CEO and be placed under the auspices of the permanent fund, specializing in profits, and not under the auspices of the governor or legislator, specializing in political expediency.
Doug Reynolds, Ph.D., is an economist who lived and worked in Fairbanks and studied the oil and gas industry of Alaska and the world for over 25 years. He can be contacted at [email protected]