Tuesday, July 18, 2017

Germany Should Say Danke For U.S. Oil

Angela Merkel’s slaps at Trump don’t help her country’s cause. America’s frackers do.


By Isaac Orr
The Wall Street Journal
July 18, 2017

German Chancellor Angela Merkel used her closing speech at the recent Group of 20 summit to chide President Trump for withdrawing the U.S. from the Paris climate accord. Yet the German people will benefit far more from the American president’s focus on facilitating U.S. energy production and boosting exports than from Mrs. Merkel’s climate policies. They have increased residential electricity prices for German households and failed to achieve any meaningful reductions in fossil-fuel consumption or carbon-dioxide emissions.

Germany has developed a reputation as a green-energy superpower, but in many respects it isn’t. Of all the energy used in Germany in 2016, 34% came from oil, 23.6% from coal, 22.7% from natural gas, 7.3% from biomass, 6.9% from nuclear, 2.1% from wind power, and 1.2% from solar. Waste, geothermal and hydropower accounted for the remaining 2%.

All told, Germany derived more than 80% of its total energy consumption from fossil fuels. That’s bad news for a country that depends on imports. About 97% of the oil, 88% of the natural gas and 87% of the hard coal Germans consume are imported.

Though they may find it difficult to swallow, the German people will benefit from Mr. Trump’s efforts to make energy resources accessible and affordable. Germans spent $73.5 billion on imported oil in 2013, when the price of Brent crude averaged approximately $108 a barrel. Since then, the U.S. embrace of hydraulic fracturing—also known as “fracking”—has resulted in a surge of U.S. crude oil on the world market, causing global oil prices to fall to about $47 per barrel. Some back-of-the-envelope math suggests Germans may now pay $41.5 billion less per year for their oil imports, constituting an average savings of around $1,107 (at current exchange rates) for each of Germany’s 37.5 million households.

Ms. Merkel’s climate and energy policies have caused residential electricity prices in Germany to spike by approximately 47% since 2006, costing the average German household about $380 more a year. The higher prices are largely due to a 10-fold increase in renewable-energy surcharges that guarantee returns for the wind and solar-power industries. These surcharges now make up 23% of German residential electric bills.

The German people are paying far more for their household energy needs under Ms. Merkel, yet they have little to show for it. Since 2009, when Germany began to pursue renewables aggressively, annual CO 2 emissions are down a negligible 0.1%.

Meanwhile, the U.S. experienced year-over-year reductions in CO2 emissions in 2015 and 2016, and CO 2 emissions have fallen a dramatic 14% since 2005. This has mostly been made possible by fracking—a practice banned in Germany. Fracking has allowed the U.S. natural-gas industry to compete with coal in a way that wasn’t previously possible, lowering costs for everyone.

Slapping around Mr. Trump, who is deeply unpopular in Germany, might score Ms. Merkel some domestic political points. But if the German leader really wants to help the environment, she might consider scaling back the attacks. Without American energy production and exports, Germany—and the world—would be a dirtier, darker and less efficient place.


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