Oil Extraction Effort Advances: The Willow Project and the Quest to Tap Remaining Oil Reserves

In a world grappling with the escalating climate crisis, the interplay between fuel efficiency, oil production, and government policies continues to be a complex and contentious issue.

Last year, the world set a disheartening record for coal production, highlighting our reliance on fossil fuels. Meanwhile, the U.S. government has given final approval for the Willow project, allowing ConocoPhillips to drill for oil on public land in Alaska. This decision breaks U.S. President Joe Biden's campaign promise of no new drilling on federal lands.

The existential threat of the climate crisis comes from the cumulative impact of projects like Willow. If produced, the consumption of oil from Willow would account for about 4 percent of U.S. annual emissions. Over thirty years, if Willow produces as much oil as expected, it would release the equivalent of 277 million tons of carbon dioxide into the atmosphere.

However, the real world doesn't always adhere to economics textbook principles. High-cost producers such as Brazil, Canada, and the United States may not cede global markets to low-cost producers like Saudi Arabia and Iraq as oil production stops first. This is because the cheaper it gets for citizens to run a car on fossil fuels, the less attractive it is for governments to spend the money to put in the infrastructure for electric bikes or trains.

The cheaper cost of fossil fuels is further exacerbated by government subsidies. In response to the energy shock of 2022, governments doubled fossil fuel consumption subsidies to an all-time high of $1 trillion.

In an attempt to mitigate the climate crisis, the Beyond Oil and Gas Alliance (BOGA) was formed. This coalition of countries, including Denmark, Costa Rica, France, Greenland, Ireland, Quebec (Canada), New Zealand, and Sweden, has pledged to phase out fossil fuel production in the coming years. However, countries like Canada and Norway, despite their high carbon taxes and progressive status, continue to approve new oil and gas exploitation.

Climate-conscious governments often justify these decisions by arguing that other countries would produce the oil if they didn't, and that ensuring jobs and revenues stay at home is beneficial. For instance, Germany and California are trying to restrict future sales of oil-powered cars and gas-powered heating.

Political scientists have argued that climate change is not solely a collective action problem, but when it comes to spending money to remove carbon from the atmosphere or cutting off existing (and polluting) energy sources, climate change does resemble a zero-sum game.

Despite the challenges, it is clear that oil production must decline in the coming decades to hit climate targets. However, twenty of the world's biggest oil companies are projected to spend $932 billion by the end of 2030 developing new oil and gas fields. This underscores the urgent need for a global shift towards renewable energy sources and a reduction in our reliance on fossil fuels.

Oil Extraction Effort Advances: The Willow Project and the Quest to Tap Remaining Oil Reserves