The Divergence of Climate Commitments and Energy Realities: A Deep Dive into the US and Global Oil & Gas Extraction

by | Dec 12, 2023 | United States, China, Crude, Saudi Arabia, US Energy Information Administration

The Guardian reports that the US is poised to extract an unprecedented 12.9 million barrels of crude oil in 2023, more than double the figure from a decade ago.

The Divergence of Climate Commitments and Energy Realities: A Deep Dive into the US and Global Oil & Gas Extraction

Introduction

As the world anticipates the United Nations Climate Change Conference (COP28), the United States finds itself at the center of scrutiny for its soaring oil and gas extraction levels. Despite the urgent global push for cleaner energy solutions, the US is on track to reach record highs in 2023, casting a shadow on its environmental commitments.

Record Extraction in the US

2023 Projections

The Guardian reports that the US is poised to extract an unprecedented 12.9 million barrels of crude oil in 2023, more than double the figure from a decade ago. Simultaneously, natural gas production is expected to hit a new record, with liquefied natural gas (LNG) exports doubling by 2027.

Long-Term Outlook

The alarming trend is not a short-lived phenomenon; Washington anticipates sustaining this frenetic pace in oil and gas extraction until 2050. This extended timeline aligns with the critical date scientists have identified for achieving a substantial reduction in planet-warming emissions.

The Biden Administration’s Climate Rhetoric vs. Reality

While President Joe Biden’s administration has been vocal about the dangers of climate change and has taken steps to promote clean energy, the extraction surge contradicts these efforts. The dissonance raises questions about the US commitment to combating climate change, especially in light of President Biden’s decision to skip COP28.

Global Hypocrisy: Oil-Rich Nations’ Actions

UAE’s Hidden Agendas

Leaked documents suggest that the United Arab Emirates (UAE) planned to leverage COP28 for oil and gas deals, contradicting their public stance. Despite denial from both conference organizers and the state-owned Abu Dhabi National Oil Co. (ADNOC), suspicions persist.

Saudi Arabia’s Contradictory Moves

Saudi Arabia, while pledging commitment to the Paris Agreement’s climate goals, is simultaneously pushing an investment plan aimed at boosting demand for its oil and gas in developing countries. The Oil Sustainability Program (OSP), touted for sustainability, reveals a focus on fossil fuels, raising questions about genuine commitment to cleaner energy.

China’s Dual Role

China, often justifying its actions as a developing nation, continues to heavily invest in fossil fuels. Despite notable strides in renewable energy, China remains the largest producer and importer of coal. The construction of 306 new coal-fired plants challenges its commitment to climate goals, posing a significant threat to global efforts in curbing carbon emissions.

Implications for Oil and Gas Investors

Investment Landscape

For oil and gas investors, the sustained high levels of extraction in the US and the contradictory actions of other major players underscore the continued significance of fossil fuels in the global energy landscape.

Market Dynamics

As one-third of the world’s planned oil and gas expansion is expected in the US by 2050, investors may find opportunities in a market that shows resilience despite growing environmental concerns.

Risks and Considerations

While the extraction boom may present investment prospects, investors must weigh the long-term risks associated with climate policy changes and increasing pressure for cleaner energy alternatives.

CONCLUSION

In conclusion, the widening gap between climate commitments and energy practices raises critical questions about the sincerity of global efforts to combat climate change. For oil and gas investors, navigating this complex landscape requires a nuanced understanding of geopolitical dynamics, market trends, and evolving environmental policies.

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