Yahoo Finance columnist Rick Newman explains how the battle against climate change is impacting the energy crisis.
SEANA SMITH: The war on fossil fuels has ramped up in recent years as the world focuses on ways to combat climate change. But those efforts are causing mayhem when it comes to producing energy that people need like oil, natural gas, and other types of carbon-based fuel. Over the past five years, the price of crude oil jumping nearly 34%. Yahoo Finance's Senior Economist Rick Newman joins us now and fills us in on quite a predicament. Rick, what can you tell us?
RICK NEWMAN: Hey, Seana. I mean, obviously all year we've been paying attention to the problem caused in global energy markets by Russia's invasion of Ukraine. And that is very important and it will remain very important for as long as that war is underway. But there's something else that's also really important that's going on.
Obviously, there's a big push in the United States and in Europe and in other countries to invest in renewables and other forms of green energy to deal with climate change and global warming. And that is necessary. But there's something else that is also necessary that is not happening as much, which is safeguarding the supply of the fuel that everybody needs today. And that is oil and natural gas mostly.
And we have seen the effects of moderate cutbacks in new capacity for oil and gas. But this oil and gas is not going anywhere. We're going to need oil just as much oil as today for at least another 10 years, and perhaps as much natural gas for the same period of time. And we are not investing in that part of the energy infrastructure. So there's a big piece missing from this energy transition from fossil fuels to green energy.
This is a very complicated story. And I've tried to lay this lay this out as clearly as I can in a piece we just published, but just one thing that I find extraordinary that I came across in my reporting. We're actually seeing a huge surge in the use of coal to power electricity plants. And that is because utilities cannot get enough natural gas this winter. So coal is likely to hit new record highs, the use of coal. That's according to the International Energy Agency.
And the price of coal has skyrocketed. I mean, this is the dirtiest form of fossil fuel. And we're actually burning a lot more. We may be burning more of it than ever. And that's because we don't have the renewable energy yet and utilities can't get natural gas. So there are all kinds of unintended consequences that are happening. And that's just one of them.
- Boy, that is a strange dynamic given the long running war on coal. So what will be the impact on prices on gas, natural gas, short and long-term because of what you just laid out?
RICK NEWMAN: Well, let me talk about natural gas because in ways I think this is more important than oil, which gets most of the attention. And of course, consumers pay most attention to gasoline prices, which obviously affect oil prices. But natural gas is really important because it's the leading source of fuel for electricity, that utilities burn for electricity.
So right now, we are seeing natural gas prices here in the United States about 25%-30% higher than they were this time a year ago. And a year ago, they were much higher than they were the year before that. Natural gas prices in Europe are way higher than they were a year ago. That's because they used to get a lot of it from Russia and they have to find new sources.
This is kind of weird because we have vast amounts of natural gas in the United States. I looked into the Appalachian basin, which is this huge deposit that runs from Maine all the way to Alabama. That is one of the largest natural gas deposits in the world. And yet, we cannot get most of that gas out of there to either American consumers or put it on the global market because pipelines keep getting killed. There have been at least five pipelines out of there that would have gotten that gas to consumers on the Eastern coast of the United States and could have exported it to Europe or other places.
And we just can't get the gas out, so this is going to be an expensive winter for a lot of Americans. And in the Northeast, where they rely on heating oil, we could actually have rationing of heating oil when there's not enough to go around because they can't get enough natural gas in the Northeast, heating oil is similar to diesel. We have a kind of a scarcity of diesel fuel right now. Like I said, this goes on and on. This is multifaceted. There's a lot to it. But something's wrong in the energy economy.
- And it's strange-- not enough attention being paid to the short nor long term consequences thereof. Senior columnist, Rick Newman, appreciate that.