Who stands to profit from an energy crisis?
Concerns about an energy supply crunch are mounting after an Iranian official threatened on Monday to “set on fire” any ships traveling through the Strait of Hormuz, a narrow waterway that conveys 20 percent of the world’s oil and a substantial proportion of natural gas, and after President Trump said the war could last for weeks. Oil prices are up, but so far the spike has not been stratospheric. That’s because the world is flush in oil and gas supplies, my colleagues reported this morning, thanks in part to record production in the United States. This “energy dominance” may have emboldened the Trump administration to act aggressively in the oil-rich Middle East, write Brad Plumer, Lisa Friedman and Rebecca F. Elliott. But a protracted conflict could seriously disrupt energy markets and raise the prospect of higher household energy bills, which could in turn lead to higher inflation. It also means some companies are positioned to profit from high energy prices. Today, we look at who is poised to make money. Trump’s fossil fuel alliesQatar’s state-owned energy company shut down production of liquid natural gas on Monday after Iranian drone attacks on two of its sites. Natural gas prices in Europe surged by as much as 50 percent in the immediate aftermath of the announcement, Eshe Nelson reported. Qatar handles about 20 percent of the world’s natural gas exports. If its production facilities remain down or ships can’t travel through the Strait of Hormuz, liquid natural gas (L.N.G.) buyers in Asia and Europe may need to find other suppliers. So who might fill that role? “We probably have the largest number of available cargoes in the market,” said Michael Sabel, chief executive of U.S. natural gas exporter Venture Global LNG, in an earnings call on Monday. Sabel was one of the attendees at a 2024 Mar-a-Lago dinner where then-candidate Donald Trump asked oil and gas executives for $1 billion in campaign contributions. Venture Global LNG also donated $1 million to President Trump’s inauguration, The Wall Street Journal reported. Another attendee at the Mar-a-Lago dinner was Jack Fusco, the chief executive of natural gas company Cheniere Energy. Fusco also donated $250,000 to a Trump-affiliated political action committee in 2024. Cheniere’s stock price jumped 5.5 percent on Monday. “The politics here is that it certainly works out well for a handful of people who kissed Trump’s ring at Mar-a-Lago,” said Lukas Shankar-Ross, deputy director at the environmental nonprofit Friends of the Earth. “But it stands to be a disaster for consumers and the climate,” he added. Venture Global LNG and Cheniere Energy declined to comment. The 1 percentIn the longer term, profits from fossil fuel companies flow to the people who own shares in them through retirement funds, pensions, hedge funds and other investment vehicles. A recent study sought to tease out who, exactly, these investors were. By analyzing the flow of record fossil fuel profits after Russia’s invasion of Ukraine in 2022, researchers found that the wealthiest 1 percent of Americans reaped about half of the benefits. The top 1 percent of American households hold a minimum net worth of $11.1 million. This is perhaps not surprising. Wealthy people tend to own the most shares in any industry, and will make money from boom times in any sector. But the finding is more interesting when you consider what happened as a result of that energy shock. Inflation went up, driven in part by oil and gas prices. And while everyone was stuck with higher bills, not everyone saw an equal hit to their household finances. “Most of the profits are flowing to the very affluent Americans, who are not subject to this cost-of-living crisis anyway because they’re so rich. They’re getting richer, and everyone else is dealing with inflation,” said Gregor Semieniuk, associate professor of University of Massachusetts Amherst who led the study. The United Kingdom responded to fossil fuel companies’ bumper year by adding a windfall tax designed to capture some of the excess profits and use the money to ease the burden on households facing higher bills. Semieniuk’s team calculated what would have happened if the U.S. government redistributed the portion of the fossil fuel industry’s 2022 profits that exceeded its 2021 returns. They found that the move would send $1,715 to every American household, which, they argued, could have helped ease the burden of inflation on lower-income households. Oil prices would have to move higher and stay high for a similar dynamic to play out in 2026, Semieniuk said.
Climate and the courtsMore than two dozen contributors to a widely used reference manual for judges are raising alarm bells about political interference after the deletion of a chapter on climate science. The uproar is over the latest edition of the Reference Manual on Scientific Evidence, which has been published since 1994 by the Federal Judicial Center, an agency that provides resources to judges. A group of Republican state attorneys general sent a letter to the center on Jan. 29, claiming that the climate chapter was biased and demanding its retraction. About a week later, the center deleted the chapter from its online edition of the nearly 1,700-page manual. — Karen Zraick Related: Vanguard Settles Case Claiming It Tried to Kill the Coal Industry Judge Approves $345 Million Verdict Against Greenpeace in Pipeline Suit More climate news from around the web:
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