Brace yourself for high inflation and exploding energy costs: Biden halts new drilling in legal fight over “climate costs”.
Last week, I reported that energy company BP is abandoning its stake in Russian oil giant Rosneft in an abrupt and costly end to three decades of operating. The move marked the most significant action by a Western company in response to Moscow’s invasion of Ukraine at that point.
Now more energy firms have joined the energy Exodus. To begin with, Exxon Mobil announced it would exit Russia’s oil and gas operations valued at more than $4 billion and halt new investment.
The decision will see Exxon pull out of managing large oil and gas production facilities on Sakhalin Island in Russia’s Far East, and puts the fate of a proposed multi-billion dollar liquefied natural gas (LNG) facility there in doubt.
“We deplore Russia’s military action that violates the territorial integrity of Ukraine and endangers its people,” the company said in a statement critical of the intensifying military attacks.
…Exxon, which is scheduled to meet with Wall Street analysts on Wednesday, did not provide a timetable for its exit, nor comment on potential asset writedowns. Its Russia assets were valued at $4.055 billion in its latest annual report, filed in February.
Earlier, Exxon began removing U.S. employees from Russia, two people familiar with the matter said. The number of staff being evacuated was unclear. The company sent a plane to Sakhalin Island to retrieve staff, one of the people said.
Additionally, Shell, Europe’s largest oil company, said that it would exit its joint ventures with Gazprom, the Russian natural gas giant.
We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security,” said Shell’s chief executive officer, Ben van Beurden, in a news release.
Shell also said it intends to end its involvement in the Nord Stream 2 pipeline project, which is intended to bring natural gas from Russia directly to Germany. The German government blocked that project last week in response to Russia’s actions.
At the end of 2021, Shell had around $3 billion in non-current assets in its Russian ventures. The company said it expects the decision to exit those joint ventures with Gazprom and related entities will affect the book value of Shell’s Russia assets, leading to impairments, the company said in the release.
Its involvement with Gazprom includes a 27.5% stake in Sakhalin-2, an integrated oil and gas project located on Sakhalin island; 50% of a joint venture developing the Salym fields in western Siberia, and 50% in an exploration venture in the Gydan peninsula, also in Siberia. Shell is one of five energy companies that have each committed to provide financing and guarantees for up to 10% of the estimated €9.5 billion cost of the Nord Stream 2 project..
Meanwhile, get prepared for even more inflation and an escalation in energy prices. As oil giants exit Russia, Biden is indefinitely freezing decisions about new federal oil and gas drilling.
The move was a response to a recent federal ruling that blocked the way the Biden administration was calculating the actual cost of “climate change.”
Under President Barack Obama, the government estimated that the damage from wildfires, floods and rising sea levels was $51 for every ton of carbon dioxide generated by burning fossil fuels. President Donald J. Trump lowered that number considerably, setting it at $7 or less per ton. Upon taking office, Mr. Biden revived the $51 level and set about updating it further — work that is underway.
Known as the “social cost of carbon,” the metric is designed to underline the potential economic threats from greenhouse gas emissions so they can be compared to the economic benefits from acts like oil drilling. Economists and climate scientists say it is needed because climate-fueled heat waves, storms, wildfires and flooding already cost the United States billions of dollars annually but those costs are often not taken into account by policymakers. Factoring in those costs could make it harder for fossil fuel projects to win federal approval.
But 10 Republican-led states sued the government, and on Feb. 11, Judge James D. Cain Jr. of the U.S. District Court for the Western District of Louisiana found that the Biden administration’s calculations “artificially increase the cost estimates” of oil and gas drilling.
Judge Cain, a Trump appointee, said using the social cost of carbon in decision-making would harm his native Louisiana and other energy producing states. He issued an injunction preventing the administration from considering the metric. The Justice Department said it intends to appeal.
It took 37% approval numbers to get Biden to change covid policy. Perhaps, when inflation is high enough, and the polling is low enough, The Science will allow the recalculation of energy costs, and new leases will be approved.
Any guess on the Biden approval number that would trigger a revision of “climate crisis” policies? I am thinking 33%.DONATE
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