BlackRock Tells Off UK Parliament, Invests in Fossil Fuels // Biden's Three-Step Plan For Lower Oil Prices

BlackRock Tells Off UK Parliament, Invests in Fossil Fuels

BlackRock told the UK parliament what its job isn't: conforming to green diktats around energy. The world's largest asset manager told a parliamentary committee "that it will not stop investing in coal, oil and gas," reports Reuters.

The response arrived with dozens of other companies' statements to the Environmental Audit Committee. When the committee asked BlackRock if it would support a net-zero policy that demanded "no new investment is needed in coal, oil, and gas," the company answered, "No."

"BlackRock is developing tools that help our investors and clients assess how the transition is likely to unfold and to support clients’ navigation of the transition and – for those who choose – to accelerate it," the firm said. "BlackRock's role in the transition is as a fiduciary to our clients – it is not to engineer a specific decarbonization outcome in the real economy."

BlackRock has a market value of over $85 billion and manages assets worth around $8 trillion. Environmentalists have criticized BlackRock for not being aggressive enough in pursuit of climate goals. But the asset manager wasn't alone among the respondents.

"Another responder HSBC, which has also been attacked by climate activists, said continued investment in existing sources of oil production was needed. It said an abrupt shift away from coal would hurt many Asian and developing economies where more people depend on coal," Reuters reports. Vanguard voiced similar sentiments.

Biden's Three-Step Plan For Lower Oil Prices

In a live speech yesterday, President Joe Biden laid out his three-step process for lowering oil prices.

Step 1: Release another 15 million barrels of oil from the Strategic Petroleum Reserve (SPR) through December to create "breathing room" for American families experiencing pain at the pump.

"Biden noted that the SPR is now more than half full, and that independent analysts have shown that these releases have played a significant role in lowering oil prices, but that gasoline prices have not come down proportionately," Oilprice.com reports.

Step 2: Convince oil producers to increase production.

“We have not stopped or slowed oil production,” Biden said. “We are on track for record oil production in 2023. The U.S. is the largest producer of petroleum products in the world.”

Biden seemed to appreciate that the oil and gas industry feels gunshy about shelling out for huge investments while unsure if they'll turn a profit. His compromise is to refill the SPR at $70 a barrel, which would put a floor on the price and benefit both taxpayers and oil companies. It would also be a boon for national security.

When the price of oil plummeted during COVID and former President Donald Trump moved to refill the SPR on the cheap, the Democrats in the Senate stopped him and called it a handout to Big Oil.

Step 3: Pass savings onto customers. Biden decried the billions Big Oil's been making and accused them of taking advantage of the war to buy back their own stock, benefitting shareholders rather than consumers.

“When the cost of oil comes down we should see prices at the pump come down too. Oil has fallen $4 a barrel in the past two weeks—$40 a barrel since mid-June. But gas prices haven’t fallen that much. If retailers and refiners were earning the average profit they made over the last seven years, Americans would be paying at least 60 cents less per gallon at the pump,” President Biden said.

The oil and gas industry lost billions over the course of that seven-year window and more or less subsidized America's post-2008 recovery when Biden was Vice President.

Biden assured everyone that he is not giving up on the energy transition. Biden did not discuss whether or not the transition includes destroying the industry as the Democrats say it will.

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Conversation Starters

1. The BBC has prepared "secret scripts" in case of winter blackouts. "The scripts[...] set out how the corporation would reassure the public in the event that a 'major loss of power' causes mobile phone networks, internet access, banking systems or traffic lights to fail across England, Wales and Scotland. Northern Ireland would be unaffected because its electricity grid is shared with the Republic of Ireland," reports The Guardian. One script reads: "The government has said it’s hoped power will be restored in the next 36 to 48 hours. Different parts of Britain will start to receive intermittent supplies before then."

2. More drones have appeared over Norwegian energy infrastructure. "Norway's domestic security agency has opened an investigation into new drone sightings near key infrastructure sites just hours after Bergen Airport, which is near Norway’s main naval base, briefly closed due to drone sightings," reports Oilprice.com. "Seven Russian citizens have been detained over the past few weeks for flying drones or taking photographs of sensitive sites in Norway."

3. Coal shipments to American power plants have dropped by over half since 2010. "U.S. power plants received 449 million short tons (MMst) of coal in 2021, less than half of the 957 MMst they received in 2010. Coal shipments to U.S. power plants declined over the past decade as coal-fired generation in the country fell and coal-fired power plants shut down," reports the Energy Information Administration. "Although coal shipments have been trending down over the past decade, 2021 shipments increased 5% from 2020 because coal-fired generation increased. In 2021, coal-fired generation rose for the first time since 2014 because of higher electricity demand and higher natural gas prices versus relatively stable coal prices."

Crom's Blessing