Home / 2017 / Drilling Ahead: Study: ‘Keep It in the Ground’ will trash economy

Drilling Ahead: Study: ‘Keep It in the Ground’ will trash economy

By Mike Killalea, Editor/Publisher

Following the no-new-fossil-fuel scheme of the Keep It in the Ground (KIG) movement would trash the economy, slash jobs and catapult energy prices into the stratosphere, a new study sponsored by the American Petroleum Institute (API) reveals.

A future in which no new fossil-fuel development occurs would hike consumer energy costs by 2040 by more than $4,500 annually, decimate GDP by nearly $12 trillion and blast the unemployment rate beyond 7%, the study said. The study was conducted by OnLocation Inc using the National Energy Modeling System (NEMS), which is maintained by the US Energy Information Administration.

The KIG movement takes the extreme view of freezing all fossil-fuel development ­­— no new projects in oil, gas or coal, all to limit production of atmospheric carbon dioxide.

Solution looks for a problem

But recent data shows this to be a solution in search of a problem. Research by the Global Carbon Project revealed that not only did CO2 emissions from fossil fuel burning not increase in 2015, they actually declined, contracting by 2.6% in the US and by 0.7% in China. This marked the third consecutive year of zero global increase in CO2 emissions. Increased use of natural gas developed through horizontal drilling and hydraulic fracturing technology was in large part responsible for this happy news. Of course, increased use of coal, unlikely as that might be given current economics, could reverse this positive trend.

But KIG doesn’t let facts get in the way of a good narrative. The activist KIG group 350
.org calls for “immediately halt(ing) new coal, oil and gas development” to meet targets in the Paris Climate Agreement.

Assumptions of the API study follow KIG goals to eliminate oil and natural gas leases, not only on state and federal lands but also on private property; completely banning hydraulic fracturing; banning new coal mines and expansion of existing mines; stopping work on pipelines, whether within the US or into the US from Canada or Mexico.

Predictably, cutting back on US fossil-fuel production raises costs for consumers. Annual household energy expenditures were foreseen to increase by a whopping 16% just by 2020. That doesn’t include what the study calls “hidden” energy costs implicit in other goods and services, which would skyrocket by another 19% in only three years.

For example, natural gas, now cheap and affordable thanks to today’s oilfield technology, would soar to $8 per million BTU by 2020. Currently, the price is barely above $3. In a KIG America, we’re looking at $40 per million BTU gas by 2040.

No one anticipates an overnight migration to renewable energy. So where would US energy come from? Back to the pre-shale future – imports, of course, forecast to increase by 6.0 million bbl/day in 2020 and more than 11 million bbl/day in 2040.

The impact on jobs is just as startling. According to the study, US employment in a KIG world would decline by 4.1 million by 2020 and by 5.9 million by 2040.

And what would a KIG planet be like? Dark, cold and polluted.

“Leave it in the ground sounds fine,” the irrepressible James Wicklund of Credit Suisse told IADC’s DrillingMatters.org. “Renewable sources exist, but you can’t replace the amperage, the horsepower, the capability of fossil fuels in a lot of uses. So without producing it, leaving it in the ground, you would have exorbitant utility bills and we would live pretty close in the industrial age of 150 years ago.”

Keep It in the Ground: Well, at least they know where they can stick it. DC

Click here to review this new study on the potential impact of Keep It in the Ground ideas.

Click here to check out the Global Carbon Project’s report on carbon emissions.

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