CDN NEWS | 
US NEWS 
Calls for Biden to socialize industry have moved quickly from fringe to mainstream
By Michael Shellenberger
More From Michael Shellenberger
Democratic U.S. Senate Candidate from Wisconsin Tom Nelson (left) and energy expert Jason Bordoff (right) are urging the Biden administration to nationalize U.S. oil and gas companies.
The energy crisis is worsening. The U.S. has fewer than 30 days of diesel and other distillate fuels, the lowest level since 1945. Supplies are so low that there will be shortages and price spikes within six months unless the U.S. enters recession, experts warn. In response, the Biden administration is releasing more oil from the Strategic Petroleum Reserve. But the reserves are of crude oil, not refined oil products such as diesel. And the releases are stifling investment in future oil production. “People are depleting their emergency stocks,” warned Saudi Arabia’s energy minister earlier this week. “Losing emergency stocks may become painful in the months to come.”
In response, influential Democrats, including a leading U.S. Senate candidate, a former Department of Energy official, and an influential energy expert, are urging the U.S. government to socialize America’s oil and gas firms.
At a Houston conference last week, Jason Bordoff, Dean of Columbia University’s Climate School, called for the “nationalization” of oil and gas companies. “Government must take an active role in owning assets that will become stranded,” he said, “and plan to strand those assets.” By “strand” Bordoff meant “make financially worthless.” Bordoff made the point at least twice during the confrerence. Bordoff’s call shocked many in the audience. “Jason is smart, well-informed, and well-connected to the Biden Administration,” said someone who was at the conference, “so these comments are scary.”
The calls come on the heels of two other Democrat-led efforts to expand U.S. government control over oil and gas production. One is a piece of legislation called “NOPEC,” which passed the Senate Judiciary Committee in May. The bill would change U.S. antitrust law to revoke a policy of sovereign immunity, which protects OPEC+ members from lawsuits. If NOPEC became law, the U.S. attorney general could sue Saudi Arabia and other OPEC members in court. The result could be a disruption of global supplies of oil and other commodities if nations retaliated against the U.S.
The other is an effort led by Treasury Secretary Janet Yellen to cap the price of Russian oil sold on global markets, which I and many other experts have warned since June is unworkable, because China and India have said they would circumvent it, and could backfire, resulting in far higher oil prices. Last week, analysts with Rapidan Energy told the same Houston conference that the December 5 implementation of the Russian price cap could reduce global supplies of oil by 1.5 million barrels per day. Such an amount would create an oil price shock.
Earlier this month, Bordoff told the World Economic Forum, which has called for a “Great Reset” to quickly move from fossil fuels to renewables, that climate change required a “massive transition” that is “going to be messy, it’s going to be disruptive.” Said Bordoff, “I think part of the broader macro environment that’s happening now is one of more disruptive change because of climate impacts, but also more disruptive change because of geopolitics coming out of the pandemic, coming out of this conflict, completely rethinking what the World Economic Forum is all about.”
Bordoff then sounded an even darker note.
“If you want to take a goal like that seriously,” said Bordoff, “it is going to be jagged, it’s going to be messy, it’s going to be disruptive. We need more, not fewer policy tools to smooth the pathway, because if people have trouble paying their energy bills, heating their homes, have issues with energy security, affordability, they take to the streets, and that’s not only bad economically and geopolitically, it makes it harder to have an energy transition and stay the course with the kind of climate policy we need.”
Bordoff’s comments reprised many of the themes he made in a Foreign Affairs article earlier this year. “The clean energy transition demands a complete transformation of the global economy,” wrote Bordoff, and “poor countries will need to follow development trajectories different from the one taken by rich countries; developing countries will have to rely far less on fossil fuels.”
Bordoff is not the first prominent Democrat to call for nationalizing the oil and gas industry. “Fossil fuel dependency undermines national security,” argued Wisconsin Senate candidate Tom Nelson over the summer. “If global warming continues unabated, huge swaths of the planet will be uninhabitable by the end of the century….The oil industry is on the ropes and it’s only a matter of time before it is bailed out or nationalized.”
A few weeks earlier, William S. Becker, a former U.S. Department of Energy regional director argued in The Hill that “the government should nationalize Big Oil. That would allow the government to manage the industry’s drawdown, a process the private sector is ignoring.” Becker laid out the exact same argument made by Bordoff. “A coalition of climate-action groups showed the world’s 60 largest banks financed nearly $4 trillion in fossil energy projects over the last five years, investments that could be stranded and lead to more requested taxpayer bailouts when the carbon bubble pops.”
Becker and Bordoff are calling for taxpayers to buy oil and gas companies so that the federal government can shut them down. “In one scenario,” explained Becker,” the federal government could buy a controlling interest in the three most dominant oil companies, ExxonMobil, Chevron and Conoco. The cost would be around $350 billion, a trivial amount compared with unmitigated climate change or the $5 trillion the government spent on COVID-19 relief, the nation’s defense budget this year ($778 billion), or fossil fuels’ $630.5 billion annual damages to public health and the environment.”
Similarly, Bordoff pointed to the incompatibility between the Biden Administration’s contradictory goals of phasing out fossil fuels while increasing oil and gas production to meet rising demand.
Progressive columnist Thom Hartmann made the case for nationalization in Salon in April. “If ever there was an industry that merited nationalization,” he wrote, “the fossil fuel industry is it. They manipulate prices to both enhance profits and swing elections, bribe their way through the halls of Congress, and pump out a steady stream of lies about climate change. All while pouring hundreds of billions into the money bins of their morbidly rich CEOs, shareholders and senior executives.”
Calls for nationalizing oil and gas firms started in radical Left publications earlier this year. “The more basic solution here would be for the government to take over the U.S. fossil fuel industry,” wrote an author in Truth Out. “Under a nationalized fossil fuel industry, the necessary phase-out of fossil fuels as an energy source can proceed in an orderly fashion.”
The author’s argument was similar to the one advanced by Becker and Bordoff. “The government could then set fossil fuel energy prices to reflect the needs of both consumers and the imperatives of the clean energy transition. At present, the U.S. government could purchase controlling interest in the three dominant U.S. oil and gas companies — ExxonMobil, Chevron and Conoco — for about $350 billion. This would be less than 10 percent of the $4 trillion that the Federal Reserve pumped into Wall Street during the COVID crisis.”
Bordoff’s comments reprised many of the themes he made in Foreign Affairs. “The combination of pressure on investors to divest from fossil fuels and uncertainty about the future of oil is already raising concerns that investment levels may plummet in the coming years, leading oil supplies to decline faster than demand falls—or to decline even as demand continues to rise, as it is doing today,” he wrote. “That outcome would produce periodic shortages and hence higher and more volatile oil prices.”
More From Michael Shellenberger
Share This:
