The Russian invasion of Ukraine has ushered in a new era of cold-war relations with Putin’s regime. For decades, Europe has built networks of energy supply around Russian gas, but this is now under threat. Instead of being driven by environmental or moral reasons, however, the push to end Europe’s relationship with Russia is being used to create a boom for the US fracking industry, writes Carys Hopkins.
Image: Fracking rig in Colorado, US, By Les Stone, Greenpeace
The fossil fuel industry is no stranger to disaster capitalism and right now, the American Petroleum Institute (API) is trying to capitalise on the disaster that is the war in Ukraine, triggered following the Russian invasion of the country on 24th February.
The industry has framed the crisis as one of energy supply, and used it to advocate a ramping up of gas extraction in the dying shale fields of America, and to increase US gas and oil exports to Europe.
Fracking – a failing industry
The shale boom of the early 2000’s lost big oil and its shareholders billions and it has been trying to claw back any revenue possible since. The industry used an extensive PR and lobbying operation in an attempt to convince the public and shareholders that natural gas was still a viable energy option.
The Permian Basin, which covers areas in West Texas and New Mexico, is where most of the natural gas in the USA is extracted.
Over the past couple of years, the industry has been greenwashing itself and releasing aggressive propaganda in an effort to sell their natural gas and turn a profit.
Mike Sommers, CEO of the API, said in 2020 that the industry needed to go on the offensive to tell its story, and that the “fracking revolution” was the most important environmental event to have happened in the last 25 years.
During the COVID-19 pandemic, smaller fracking companies in the USA asked the federal government for bailouts. This was heavily objected to by Exxonmobil and Chevron, but only because the smaller companies would get larger payouts under the proposals, and Exxon and Chevron would get smaller ones.
Even though the industry was losing lots of money prior to the pandemic, it managed to alter the narrative to the pandemic being the cause of major losses.
Research from DeSmog found that: “Since 2007, the oil and gas industry has lost $280 billion betting on the shale boom, which has been made possible by hydraulic fracturing (fracking)”.
They also revealed that the fracking industry has never actually made a profit.
So the big bet on natural gas in the end sunk profits and left the industry with assets they can’t do much with.
Ukraine & the fracking industry
Fast forward to March 2022, when world leaders are in a rush to ban Russian oil and gas imports in the wake of Vladimir Putin’s assault on Ukraine.
US President Joe Biden recently announced a ban on US imports of Russian oil and gas, whilst Kwarsi Kwarteng – the UK Government Minister responsible for energy – and Boris Johnson, have also announced a transition away from Russian oil imports in the UK.
At a G7 meeting on 10th March, world leaders gathered to deliberate over the Russian oil and gas situation. The results of this are yet to be formally announced. However, since we have already seen that prior to the meeting, the UK, USA and Canada all announced bans on the import of Russian oil/gas, it is likely the rest will follow suit.
Europe is a huge consumer of natural gas, consuming 541 billion cubic metres (BCM) in 2020 alone, but it is not a big producer of natural gas. Russia, the US and Iran, meanwhile, are the biggest producers globally.
The current situation is especially beneficial for the US fossil fuel industry, which as of 2020 the USA had “about 473.3 trillion cubic feet (Tcf)” of natural gas reserves. They now see a much clearer path to get these reserves into the European market.
Of course, this should be halted by the spectre of the climate emergency and the need to cut out fossil fuel use altogether. And if most countries in Europe are striving for net-zero by 2050, and have signed the Paris Agreement, then how does changing supplier for natural gas and oil to the USA fit into the equation?
There are two phrases that are thrown around that give us a clue as to how European states plan to square the circle — Lower carbon fuel and Lower carbon energy transition. These are often repeated by the UK government and several US states alike. They actually come from the fossil fuel industry itself. Technically, natural gas is a lower carbon fuel, but the phrases are really just PR.
Natural gas is lower carbon because it is made up mainly of methane. A quick reminder: methane is still a greenhouse gas and a fossil fuel, and scientists have argued it to be more potent and harmful than carbon is.
At the same time, it is important to take a look at how this industry treats not just the environment, but people too.
Cancer Alley, Louisiana, is one of the most severely impacted areas in the USA by the fossil fuel industry, where most citizens are suffering greatly from cancer, tumors, and other severe health conditions. The UN conducted a report of their own into what they described as the environmental racism that is present in this area of Louisiana.
They found that “The combined emissions of carbon dioxide equivalent (CO2e) per year in a single parish could exceed those of 113 countries”.
The irony is that oil and gas are easy fuels for society to come away from and we have the alternatives ready.
But it is the sophisticated lobbying and PR machine of the industry that has made it seem neither easy nor possible to move away from oil and gas. This is in the face of mountains of scientific evidence and even the latest IPCC report, which could not be clearer: we need to ditch fossil fuels now.
Despite this, the industry in the US is looking to grow. Many of the restrictions on the fossil fuel industry were lifted during the Trump administration, and further restrictions have been waved away during the current Biden administration.
Whilst there is a rather manufactured debate in the US over whether Biden has been too hard on the fossil fuel industry, the truth is that he has done nothing to regulate or restrict the industry.
There is currently “more than 26 million acres under lease” to the fossil fuel industry onshore in the US. And offshore, “12 million acres of public waters under lease”. The American fossil fuel industry also has “7,700 unused, approved permits to drill.” They have an enormous amount of resources at their fingertips, and are eager to get going.
A two-sided game
However, the industry has been playing a two sided game when it comes to Russia. On the one hand, it eyes an opportunity for US gas drilling, but on the other, it doesn’t want to hit its own investments in Russia.
It was against this backdrop that the API began lobbying for weaker sanctions on Russia back in January. Afetrall, the group’s members have big investments and steaks at risk in Russia.
At the same time, the API used social media — mainly Twitter — to put forward the case for protecting US “energy security” shortly before the Russian invasion of Ukraine. Laying out the way forward for the oil and gas industry in the US, they advocated opening up more permits for drilling and further deregulating the industry.
As a group, however, the API ultimately panders to Exxonmobil’s wants and needs, it being the biggest member. As Exxon has had a long history of doing business in Russia, the efforts to compel the US government to take weak actions on the country are all about protecting its own profits.
Former Exxonmobil CEO Rex Tillerson, who later became US Secretary of State under the Trump administration, is a longtime friend and business partner of Russian President Vladmir Putin. The API has in the past lobbied against Russian sanctions, which many have seen coming directly from Exxonmobil.
Rosneft is a major Russian oil and gas company that many big oil firms in the West have major shares in, and generates huge profits for them each year.
In the past couple of days and weeks, however, as the geo-political situation has been blown apart by the invasion of Ukraine, major players in the fossil fuel industry, with big holdings in Rosneft,have pulled out of Russia.
Exxonmobil, Shell, BP and Equinor are set to take a serious hit from the moves. BP is ending a 30 year relationship and losing its $14 billion stake. Exxonmobil is seeing a loss of a 25 year relationship and $4 billion. Shell is set to lose $3 billion. And Equinor is to lose $1.2 billion.
One immediate question is, who is going to buy those assets? And if they don’t drill it, won’t someone else? The prospect is not simply that US energy replaces Russian energy, but that the US expands its operation whilst fossil fuels continue to be drilled at a phenomenal rate.
Since big oil is severely lacking in shame or any kind of social conscience, it came as quite a shock to hear them ditch their assets in Russia, which will cost them billions. Interestingly, no such moral compass was evident over the invasion of Iraq.
We also do not yet know the full scale of the withdrawals, or when they will be actioned. Big oil is keen to tell its own narrative, and right now, we just don’t know the full details of what this all means.
What we do know is that the US fossil fuel industry has been racing for the custom of Europe for a long time now, and this is their shot.
Eyeing an opportunity for profit
Mike Sommers, CEO of the API said recently that: “Few things are more important than providing #energy security to our friends in #Europe. Actions to restrict U.S. natural gas and oil production are steps in the wrong direction.”
Even the super-rich oligarch Elon Musk had a few things to say on the subject: “Hate to say it, but we need to increase oil & gas output immediately. Extraordinary times demand extraordinary measures.”
It’s interesting to see Musk joining up with the API, especially when the product he makes is sold as a move away from oil and gas. But Musk is a US capitalist first and foremost, who does also rely on the extraction of fossil fuels to operate his huge business and who has an interest in seeing US imperialism succeed. His stance can be seen in the context of a general shift in position among the US capitalist class as a whole. The hope is that this is replicated across Europe as well.
Over the past two weeks, we have seen analysts move from saying it will be impossible for Europe to stop using off Russian oil and gas, to later changing its position to saying it will be difficult, all the way to the IEA releasing a plan for how we can move away completely from Russian energy within 6 months.
It is a great time if you are big oil in the United States. The heavy (very pollutant) clouds of the past couple of years are moving, and the opportunities are bright. But, the prospects for those here in Europe or anywhere across the world with a future fueled by US big oil is incredibly dim.
What does seem clear, however, is that a major shift is taking place, where the crisis in Ukraine is being used to try and bolster the US’s global interests and make Europe, and the US, less entangled with the Russian economy. Already, we are seeing how this strategy derived from imperialist rivalry is set to drive up food scarcity and poverty across the world.
Now it is set to devastate more land through fracking, and wreak havoc on our natural world through the additional extraction of fossil fuels. Whilst demonstrating the possibility, and ease with which we can remove some fossil fuels from entering the UK market. Why not put measures in place to exclude them from the market altogether?
For environmentalists in the West, we must reject the attempt to bolster fossil fuel industries in Britain and the US, which will only serve to hasten the destruction of our planet in the name of profit.
