According to Britain’s The Guardian, there is a suggestion that Shell Oil Company, the same company that attempted offshore oil well drilling here in Alaska, needs to be nationalized and turned into a renewable energy company. Naturally, this begs the question of how this actually stops global warming and what the tax payer will be left paying once the renewables strategy becomes a loss maker.
As a forth coming book by David R. Mores points out, there are two markets in climate change activism: the economic marketplace and the political marketplace. Clearly, the economic market shows a desire by consumers to use the cheapest energy possible, at least in the short term, to transport themselves, their products and the inputs to their products. So far, the cheapest way to do all that is to use fossil fuels, which is why most consumers are so keen to use them. On the political market, activists have been unable to implement enough policies to slow down the use of fossil fuels, or at least enough to suit their tastes. Again, this is because the most voters choose short-term economic benefit.
What is left is to attempt to disrupt the middle of the fossil fuel market between the fossil fuel mineral rights holders, who sell the mineral rights to fossil fuel extraction companies, and fossil fuel buying public, who still choose to use these fuels. The in-between strategy includes trying to vote in boards of directors to stop the extraction companies. It also includes stopping projects like the XL Pipeline. Now one of the latest attempts for this in between strategy is to nationalize Shell Oil Company in order to turn it from an oil and gas extraction company into a green energy company.
Such a strategy may indeed cause slightly less effort to find, extract and commoditize fossil fuels and thus increase fossil fuel costs by a certain small amount. This might be enough to somewhat reduce usage. It may also bring about slightly more investments in renewable energy, which would develop those fuels and technologies faster than otherwise.
Still, such a strategy is unlikely to be the most effective method. If you want to reduce fossil fuel production, just have a set of G7 or G20 policies to incentivize OPEC+ to reduce their outputs by 10% or 20%. And if you want more renewables technology, just have government sponsored research based on competitive bids to multiple contractors for any and all renewables technology, and even nuclear technologies. Such government grants are more effective at achieving success in creating new technology than by subsidizing a government run company (especially if it does not have an incentive mechanism). For example, look at Space X, which received government funding and developed better rockets. Giving out government competitive contacts for different energy technologies is not a bad idea.
Still in the grand scheme of things, cheaper oil and gas can induce greater economic growth in general which can induce a larger technological enhancement. Cheaper oil and gas can also reduce the costs of mining. Reducing mining costs is important in order for most renewables technologies to attain cheaper rare earth and other minerals needed in all their technologies such as copper, lithium and lanthanides. Of course, you also want to make sure that oil and gas is extracted in an environmentally sound way.
Alternatively, there may be one way to make such a national oil company work. Have a properly incentivized, profit maximizing, Alaskan mineral rights developing, state-owned oil company develop oil prospects in ANWR, off-shore and elsewhere in Alaska. This could be a way to pry loose those mineral rights using state rights and a bonus incentivized CEO to run such a company. But unlike AIDEA, it should have an incentivized CEO for profits and be put under the auspices of the permanent fund, which specializes in profits, and not under the auspices of the governor or the legislature, which specialize in political expedience.
Doug Reynolds, Ph.D., is an economist who has lived and worked in Fairbanks and has studied Alaska’s and the world’s oil and gas industry for over 25 years. He can be contacted at firstname.lastname@example.org.