It is so dry in the Midwest that the trees are bribing the dogs. So goes the joke from the dust bowl era of the 1930s. In the past two weeks, the US has broken a record number of heat records. And in the past 12 months the average temperature has beaten any since US records began – including 1933, the hottest year of that overbaked decade.
Nor are the weather gods victimising America. According to Nasa, nine of the 10 hottest years globally have occurred since 2000. And so on, from one statistical milestone to another, until we reach a nagging dilemma: evidence of global warming has never been stronger but the public appetite to respond has rarely been weaker. Nowhere are both observations truer than in the US. Yet in few places do the list of alibis stack up so impressively.
To the surprise of many, President Barack Obama in April told Rolling Stone magazine that he would make tackling climate change a second term priority. Were Obama to regain the White House and pick up on that stray promise, he would face three challenges that were either absent or weaker than when he was first elected. The odds of him creating some kind of carbon regime would surely be lower. As the recent wildfires in Colorado and the drought in Texas attest, continued inaction will hit Americans as well as foreigners.
The first, and least foreseen, development since 2008, is that America is rapidly turning from a consumer into a producer nation. On economic grounds, its expanding energy horizons are manna from heaven. When Obama was elected, the US was importing almost two-thirds of its oil. That number is down to below almost half and falling. In 2008, King Coal still dominated US electricity production. Last month natural gas supplanted coal as the largest source of US power supply.
So dramatic are America’s finds, analysts talk of the US turning into the world’s new Saudi Arabia by 2020, with up to 15 million barrels a day of liquid energy production (against the desert kingdom’s 11m b/d this year). Most of the credit goes to private sector innovators, who took their cue from the high oil prices in the last decade to devise ways of tapping previously uneconomic underground reserves of “tight oil” and shale gas. And some of it is down to plain luck. Far from reaching its final frontier, America has discovered new ones under the ground.
The second is political. Even without a deep recession and the subsequent weak recovery, America’s new energy abundance would have altered the mood. But the combination of the two has killed off talk of tackling climate change (barring Obama’s brief aside to Rolling Stone). In 2008, John McCain, the Republican candidate, had a cap-and-trade plan to curb carbon emissions. In 2012, Romney avoids the subject altogether.
Both positions capture the temper of their times. So too does Obama’s altered language. Fate has offered him a windfall. According to IHS Cera, the energy research group, hydraulic fracturing alone has created 600,000 jobs in the US – almost exactly as many employees as have been shed by state and local governments since 2009. Think of how much worse the jobs picture would be without the energy boom.
Last month, Rex Tillerson, chief executive of ExxonMobil, admitted global warming was happening – a big step for the company that has most aggressively argued against it. He added that all we could do was adapt to the changes around us. Thus, unusually, Exxon finds itself bang in line with public opinion. In a Washington Post/Stanford University poll last week, a large majority of Americans said global warming was happening. Equally wide margins were opposed to taking mandatory steps at home, or providing assistance overseas, to try to slow it down.
Given the mood, it would be political suicide to propose putting a price on carbon. And it is hard to believe that calculation would change after November. Some of the 2010 Democratic midterm defeat in the House was blamed on passage of the controversial Waxman-Markey cap-and-trade bill, which died in the Senate that year. It is unlikely Obama would risk a consecutive midterm disaster in 2014.
The final challenge is logical. Without meaning to, America has cut its carbon emissions by more than 7 per cent since 2007. Europe’s emissions have dropped by almost 10 per cent. Much of this is because of reduced economic activity. But according to a new paper from IHS Cera, more than half comes from the shift from coal to gas. America is undergoing the equivalent to Britain’s “dash for gas” after the coal miners’ strike of the mid-1980s, which is bringing a large one-off reduction in carbon output. But global emissions keep growing.
Americans know this, and grasp that the world economy will roughly double in the next 20 years, which in turn will lead to a surge in emissions (of up to 50 per cent by 2030). Even if Obama conjured a binding carbon ceiling out of thin air in his second term, it is countries such as China and India that will set the global level.
Meanwhile, those five million “green-collar jobs” Obama once promised have been quietly forgotten. Most of America’s new jobs are on drilling rigs in places such as North Dakota, New Mexico and Ohio. With November looming, Obama is starting to pick them out as backdrops.
Copyright The Financial Times Limited 2012.
The new world of American energy
With the US importing less oil, and natural gas supplanting coal as the largest source of US power supply, talk of tackling climate change has been killed off on both sides of American politics.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free