Why are we settling for inflation?
The recent UN climate summit COP27 has accelerated a global push for green energy without regard to unintended consequences.
Although admirable, the unabashed disregard of the critical role fossil fuels plays to the national and economic security of the United States is dangerous and reckless.
We need to be realistic as a society and understand that fossil fuels provide 80 percent of the U.S. economy's energy needs. The stark reality is that we depend on fossil fuels for our defense, food, heating, transportation and medicines, among other things.
We need to be prudent not to decarbonize our society too quickly, inflating the cost of electricity, causing the ire of the public, or to push the financial institutions to be the facilitator of environmental constraints.
Larry Fink, CEO of Blackrock, warned that in the rush "just to get a green world, we're going to have much higher inflation, because we do not have the technology to do all this … to the cheapness of hydrocarbons." We know that the price of crude oil will go up and down based on demand and world events that we cannot control, however we control the supply of our critical needs such as diesel and jet fuel for our defense needs with our Strategic Petroleum Reserve (SPR).
The subsequent unintended consequence is the degrading of U.S. energy independence that could result in potentially rationing of heating oil to our citizens, driving us to discuss purchases of crude oil with dictators, going "hat-in-hand" to beg other countries not to cut oil production to a loss of 31,000 jobs in the petroleum sectors, and 7,100 jobs in coal country.
The Strategic Petroleum Reserve, created by Congress to support critical national defense needs, is being depleted and used as a political tool to temporarily reduce gasoline prices. These poli- cies have apparently resulted in stagnation of the production and transportation of critical fossil energy resources and dramatically increased our dependence on intermittent renewable energy sources that are likely not yet ready to handle sudden high energy demands.
Moody Chief Economist
Mark Zandi recently said fossil fuels were a major cause of every period of inflation since World War II. "Invariably, it's the high cost of oil and fossil fuels in general that drive big fluctuations and overall inflation," he said, adding "every recession since World War II has been preceded by a jump in oil prices." Higher oil and gas prices are responsible for major portion of the price increases across the economy.
Our country is blessed with abundant fossil resources that can provide for our energy needs for the next 250 years. Using proven, decades old, inexpensive technology, we can at minimum produce the oil products our national defense forces require and to replenish our national SPR. Proven technologies such as FischerTropsch synthesis that the U.S. and the rest of the world are already using would allow us to safely take advantage of coal resources to produce synthetic crude that we can use to replenish our SPR.
The Fischer-Tropsch synthesis is a high-efficiency process, which converts coal, a low energy dense source, into high energy-dense liquid fuels, such as diesel, jet fuels and petroleum products.
Texas and Wyoming, for example, have over 165 billion tons of recoverable coal deposits.
These deposits can produce over 300 billion barrels of synthetic crude oil, representing at the current usage rate, about 25 years of U.S. crude oil consumption. Think of this as filling our
SPR 400 times.
This technology also eliminates other harmful chemicals such as sulfur and nitrogen oxides. The Fischer-Tropsch synthesis captures 100 percent of the carbon dioxide produced for safe, permanent, underground storage.
These technologies have been successfully used for over 80 years since WWII, and economically produce synthetic oil at a cost of $50 to $70 per barrel.
The U.S. has the resources and expertise to regain its energy independent status by using its vast domestic energy deposits in an economically and environmentally safe manner. Although existing technologies exist there must be the following for any success: Public support to site and build coal to liquids facilities.
Government tax incentives. Federal and state assistance to fasttrack permitting. State, private and public partnerships to assist with financing.
The question is: Why are we settling for less? The cost is too great to continue to use fossil fuels as a political tool working against the best economic and security interests of our citizens.