The energy world is changing. Whether it is for good or bad - is still to be decided.

The US is to be the world’s top crude producer, once again in a few months, and if a recent HSBC report is to be believed, the state of Texas is the new, emerging global super oil power. It is all set to surpass Iraq and Iran as the world’s number three oil producer.

The amount of oil in the Permian basin in Texas rivals Saudi Arabia’s Ghawar Field, the world’s largest, super giant conventional oilfield. Ghawar has been producing almost five million barrel per day (bpd) of crude for nearly six decades, and continues to go strong.

As per the report, the combined output of the Permian and Eagle Ford in Texas is expected to rise from 2.5mbpd in 2014 to 5.6mbpd in 2019. In comparison, Iraq’s daily production is estimated at about 4.8mbpd, while under normal circumstances, with no sanctions in place, Iran is projected to pump somewhere around 3mbpd.

Spurred by this scenario, the US is moving on to impose financial sanctions against Tehran. However, to try and minimise the effects of the sanctions during the mid-term election months, in late August the US Department of Energy offered 11m barrels of crude for sale from the nation’s 660m-barrel Strategic Petroleum Reserve (SPR). The delivery period for the proposed sale of sour crudes will be from October 1 through November 30, coinciding with the imposition of sanctions on Iran and the upcoming mid-term elections.

The euphoria, however, is carrying long-term consequences, allowing the US to brush aside concerns about climate change and return to its addiction to fossil fuel. In a major, new policy statement, the Trump administration has underlined that conserving oil is no longer an economic imperative for the US. This change in direction undermines decades of government campaigns for gas-thrifty cars and other conservation programmes. The position was outlined in a memo, released online last month. It highlighted the administration’s proposal to relax fuel mileage standards.

The growth of natural gas and other alternatives to petroleum has reduced the need for imported oil, which “in turn affects the need of the nation to conserve energy,” the Energy Department said in the memo. It also cites the now decade-old fracking revolution that has unlocked US shale oil reserves, giving “the United States more flexibility than in the past to use our oil resources with less concern.”

With the memo, the administration has formally challenged the very justification for conservation - even congressionally prescribed ones, as with the mileage standards. The memo makes no mention of climate change. During his election campaign too, President Donald Trump was seen questioning the very existence of global warming due to emissions from the use of fossil fuel.

The proposals put forward by the administration now include one that would freeze mileage standards for cars and light trucks after 2020, instead of continuing to make them tougher. The proposal eventually would increase US oil consumption by 500,000bpd, the administration says.

The US actions are having a ripple effect. In the next door Canada, the Liberal Trudeau government’s Pan-Canadian Framework on climate change (PCF) is now under threat. In order to control emissions, the plan required provinces to establish a price on carbon or have one imposed by Ottawa.

Apparently emboldened by Trump’s measures across the border, opposition conservatives are now rallying against the plan. Conservative Leader Andrew Scheer while delivering a key speech in late August at the Conservative Party policy convention said that his first move would be to get rid of the Liberal’s price on carbon if his party wins the election next year.

Already the newly-elected Ontario Conservative Premier Doug Ford has announced scrapping his province’s cap-and-trade system. Alberta’s Premier Rachel Notley of the left wing NDP has also vowed to pull the province out of the national climate plan after the Federal Court of Appeal’s decision put the Trans Mountain pipeline expansion project on hold. Her opponent, the United Conservative party leader Jason Kenney has also proposed ditching the province’s carbon tax.

Others could follow.

Energy conservation is an absolute necessity. Climate threats are real. Good, old friend, Fatih Birol, the energy guru of the world today also admits, urging the world to take note. Yet with new found assets to play around with - some seem tempted to brush aside the subject.

What a mess, this world is heading into.

Published in Dawn, September 9th, 2018