Back in the Obama era, Matt Damon starred in and kind of directed an anti-fracking movie called Promised Land. This movie was funded in part by the government of Abu Dhabi, one of the United Arab Emirates.
Abu Dhabi’s government is one of the leading producers of oil and gas.
This makes perfect sense. A leading producer of oil and gas would definitely support efforts to restrict U.S. production of oil and gas.
Regulation is often an effort by incumbent businesses to crush newer competitors. Twelve years ago, the big petrostates saw fracking as a real threat.
“The unconventional oil revolution being witnessed in North America could have dire consequences for the region,” reported MEED, a journal covering the business of the Middle East.
“The fall-out from cheaper oil shale production would mean that for some oil economies staring down the barrel of lower-yield oil fields coming to the end of their operational lifespans, spending hundreds of millions, if not billions, of dollars to maintain 50,000 or 100,000 barrels a day for another 10 years of production may not be worth the investment.
“This is especially true in the Middle East where huge subsidies on domestic oil consumption are putting an even greater strain on government revenues.”
Damon and friends didn’t succeed in throttling fracking, but in the Biden era, there are new political pressures: ESG and Democratic politicians’ dream of “decarbonization.”
While President Joe Biden has been smart enough not to curb oil and gas exploration during his presidency — doing so would be economically disastrous — he has led the charge in convincing American companies to try and move beyond petroleum.
The New York Times covered the consequences of this shift.
“As Western Oil Giants Cut Production, State-Owned Companies Step Up,” the headline reads.
“In the Middle East, Africa and Latin America, government-owned energy companies are increasing oil and natural gas production as U.S. and European companies pare supply because of climate concerns.”
This suggests that Western decarbonization and ESG efforts don’t actually reduce oil consumption — they just shift production to petrostates. The geopolitics of this are not great.
“State-owned oil companies in the Middle East, North Africa and Latin America are taking advantage of the cutbacks by investor-owned oil companies by cranking up their production.
“This massive shift could reverse a decade-long trend of rising domestic oil and gas production that turned the United States into a net exporter of oil, gasoline, natural gas and other petroleum products, and make America more dependent on the Organization of the Petroleum Exporting Countries, authoritarian leaders and politically unstable countries.”
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Russ Greene flagged this old story in some comments on X, noting that it is very appropriate that the ESG movement had a confab in Saudi Arabia.
Remember this every time you see someone claiming they’re on the green side. They might just be on the side of oppressive petrostates.