What oil companies gain from the landmark climate bill
MICHEL MARTIN, HOST:
The landmark climate, health care and tax package called the Inflation Reduction Act, adopted by Congress this week, will pour hundreds of billions of dollars into renewable energy programs. But it also includes provisions to help the fossil fuel industry, allowing for new offshore drilling in addition to other benefits for oil and gas companies. Some environmental advocates say such provisions undermine the legislation's intended goal of addressing climate change by helping the country move away from dependence on fossil fuels to renewables for our energy needs. But others say the benefits outweigh the negatives.
To assess that, we decided to turn to someone with knowledge of how the oil industry actually operates, and we found Gregory Brew. He's a postdoctoral fellow at the Jackson School of International Affairs at Yale University, and he studies the oil industry. Gregory Brew, welcome. Thank you for joining us.
GREGORY BREW: Thanks so much for having me on.
MARTIN: You know, a lot of environmental groups are just outraged at the new allowances for drilling in the Gulf of Mexico and elsewhere. It is understood that these were included to assuage or to win the support of a Democratic senator, Joe Manchin of West Virginia. So I guess the first question I had is, as a person who sort of studies this in an integrated way, what was your reaction when you read about these provisions?
BREW: Well, first of all, I think it's important to acknowledge, as many climate groups, climate activists are doing right now, that this is a bill that is quite favorable to fossil fuel companies, to oil and gas companies. And that shouldn't come as any surprise. And the elements that are included within it that seem favorable to the oil and gas industry, while significant, aren't necessarily slam-dunk provisions. You know, the offshore leasing provision, the provision regarding the methane fee and then provisions supporting clean energy projects like carbon capture and hydrogen, these are all things that the oil industry is concerned about. And some of them support the industry's interests and goals, and some of them are going to push fossil fuel companies towards acknowledging the realities of climate change and the realities of cutting emissions. So I would stress a more balanced approach to what this bill contains and the impact it's going to have on energy industry more broadly.
MARTIN: How will we assess this going forward? As you've mentioned, as we've talked about, the energy policies in this bill are meant to speed up renewable energy adoption, OK? So I'm imagining that pursuing offshore drilling projects takes time and money. Is this a question of timelines, whether those timelines intersect? I mean, is new offshore drilling a certainty? Given your knowledge of how the industry operates, I just am not sure - how do we assess this?
BREW: That's a really great question. So if you roll the clocks back a year and a half when Joe Biden was elected president, he vowed to end oil and gas leasing on federal lands. This was an important pledge that he made during the campaign, and this was something that, as you would expect, oil and gas companies opposed. But at the same time, there have been a lot of lease sales over the last several years, especially for offshore areas, that haven't generated a whole lot of interest. While some of the larger companies are investing in offshore drilling, it's not a high-growth area the way it was ten years ago. The high-growth areas are really in the shale fields or internationally in areas like Guyana, where ExxonMobil has been very active lately.
So the provision for oil and gas offshore leases was an important victory for the oil and gas industry. It rolled back Biden's original pledge. But offshore drilling, in my view, won't make up a hugely important part of what the oil and gas industry is going to focus on moving forward. I predict more investment and more interest in shale oil formations onshore and in oil fields internationally. So while there is going to be more activity in the Gulf of Mexico, it's also going to include offshore wind and other clean energy initiatives.
MARTIN: You know, as a scholar, you - I assume, you know - interact with executives and analysts within all of these different companies. Are these companies - the oil - I'm talking about the fossil fuel companies right now - are they all on board with this idea of diversifying energy sources? Or do you see a split within the industry about that? I mean, among scientists, climate change is not a debatable fact anymore. It's not something to debate anymore. But I'm just saying within the industry, do you think that that acceptance has taken hold? And is there an industry-wide acceptance of and interest in pivoting toward renewables?
BREW: Not quite. There are very interesting lines of friction within the industry. At one end, you have the largest companies - ExxonMobil, Chevron, the international companies like BP and Shell - and they have largely acknowledged the importance of climate change and the need to cut emissions both from, you know, burning fossil fuels, but also from things like methane leaks and operations. They've rolled out net-zero pledges and commitments. They want to invest in clean energy and renewables.
On the other hand, you have many American companies, sometimes referred to as independents, which tend to be a little smaller, and some of these companies tend to be much more conservative, and some of them are hostile to the idea of acknowledging climate change, the idea of cutting emissions. They see renewables as a threat. In some cases, oil and gas drilling is a cultural element. It's part of the livelihood. It's part of the history, particularly in areas like West Texas. And there I think you're going to see resistance to the bill, and it's going to develop in interesting ways as the industry evolves and deals with the reality of climate change and the reality of state action to try to combat it and to cut emissions.
MARTIN: Gregory Brew is an energy historian and a fellow at Yale University. Professor Brew, thanks so much for joining us and sharing this expertise.
BREW: Thanks so much. It was a pleasure.
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