US President Joe Biden’s administration should step in to subsidize fracking operations, according to Michael Harris of Cribstone Strategic Macro, as oil prices climb to their highest levels since 2008 on Russia supply disruption fears.
Russia’s military forces on Monday continued to attack some Ukrainian cities as Moscow’s invasion entered its twelfth day.
Oil prices have soared more than 60 percent since the start of the year due to the crisis, and the prospect of the US and Western allies imposing a ban on Russian crude has lent further support to crude futures.
“We need a government policy response that is effectively going to address this. And this is where I feel really, really strongly that the US needs to step up and say we’re going to do something which seems very, very outrageous and we’re going to subsidize frackers,” Harris told CNBC’s “Squawk Box Europe” on Monday.
“The reason I think it seems outrageous is in the context of what’s going on with climate but in a geopolitical context, it would make perfect sense. If it were 20 years ago, this might be very, very natural,” he added.
His comments come just one week after the world’s leading climate scientists delivered a landmark report on the real-world impacts of the climate emergency.
In an ominous conclusion, the Intergovernmental Panel on Climate Change warned on February 28 that any further delay to concerted global action on climate adaptation and mitigation “will miss a brief and rapidly closing window of opportunity to secure a livable and sustainable future for all.”
U.N. Secretary-General António Guterres described the findings as an “atlas of human suffering,” before adding that the report once again makes it clear that “fossil fuels are choking humanity.”
The IPCC reaffirmed the urgent need to rapidly phase out fossil fuels in order for humanity to avoid the worst impacts of the climate crisis. To be sure, burning fossil fuels, such as coal, oil and gas, is the chief driver of the climate emergency.
The report was published at a time when there are fears Russia’s onslaught of Ukraine could distract policymakers from taking fast and far-reaching climate action.
In a crisis, Harris said there would typically either be an “easy fix” or some kind of policy response to resolve the problem, and a simple solution does not appear to be forthcoming.
“Now, usually markets look for central banks to have an answer and central banks, unfortunately, absolutely do not have an answer. This is a problem for them and if anything, their actions will contribute to the problem because of the inflationary ramifications of oil,” Harris said.
As a result, he said the US needed to “think outside the box” and consider imposing a minimum pump price, which could be set at $75 or $80 a barrel.
For more information visit www.cribstone.co.uk
