There’s a lot of good news about American energy

What does an effective transition from fossil fuels to green energy look like?

Ardent environmentalists prefer the fastest possible phaseout of coal, oil, and natural gas — even banning them if necessary — regardless of the costs. On the other end of the spectrum, “drill, baby, drill” regressives deny there’s any climate change caused by fossil fuel emissions and want to burn carbon energy forever.

The sensible approach is neither of those things. Renewable energy is necessary to slow the warming of the planet and forestall the many ugly consequences of that. Yet moving too fast can destabilize an economy still heavily dependent on fossil fuels. A steady replacement of fossil fuels with green energy is the optimal way to keep the economy growing without disruptions that cause soaring energy costs, rapid job loss in declining sectors and consumer rebellion that could undermine the whole cause of decarbonization.

We may actually be achieving that. During the last two years, American production of fossil fuels has hit new record highs, while US carbon emissions have declined. Emissions are falling even though the US economy is growing and we’re using more energy. That means the US economy is getting less “carbon-intensive,” or less reliant on fossil fuels to keep humming.

US oil production has hit a new record of 13.5 million barrels per day, eclipsing the 2019 record of 13 million barrels. Production could hit 14 million barrels per day in 2024. That makes the United States the world’s largest oil producer, followed by Saudi Arabia and Russia. The United States has also exported record amounts of oil this year.

The same goes for natural gas: Domestic production and exports both hit record highs this year. The trends are similar in Canada, where oil and gas production are also at record highs.

This might sound dreadful to climate warriors who bemoan any new fossil-fuel production as further toxins poisoning Earth’s lungs. But home-drilled fossil fuels are crucial in a world where tyrants such as Russian President Vladimir Putin would hold Western democracies hostage to fossil fuels, if they could, and a Middle East war could threaten global supplies and send prices soaring with one bomb in the wrong place.

Drop Rick Newman a note, follow him on Twitter, or sign up for his newsletter.

It's a minor miracle that oil and gasoline prices have stayed in the normal zone during the past year, despite Russian efforts to weaponize energy, production cuts by the OPEC+ oil cartel, and general mayhem-making by Iran. Record levels of US energy production are a force for global stability and a source of leverage for the United States in particular, which is far less susceptible to a Middle East oil shock than in the 1970s, way before the fracking revolution unlocked vast new US reserves.

That is not stopping progress in reducing emissions and replacing the dirtiest fossil fuels with cleaner forms of energy. Carbon emissions in the US power sector have been declining since 2007, largely because of the retirement of plants fired by coal, the dirtiest fossil fuel. There was an upward blip in 2021, amid the COVID recovery, but 2023 emissions are likely to come in 3% below 2022 levels and 7% below pre-COVID levels of 2019. The biggest reason is the replacement of coal plants with those powered by natural gas, which is a lot cleaner, plus the addition of clean power from solar and wind.

Electric vehicles are another big new development, going from basically no share of the new-vehicle market a few years ago to 8% by the end of 2023. That coincides with a modest drop in carbon emissions from the transportation sector since 2019. It’s hard to isolate the effect of EVs, since the improving efficiency of gas and diesel automobiles is also a factor, but the trend is clearly going in the right direction, given that Americans continue to drive more.

These reductions in carbon emissions could pick up steam as some $1 trillion in new green-energy incentives contained in the 2022 Inflation Reduction Act come online. That breakthrough law, the biggest set of green-energy measures Congress has ever passed, will speed the adoption of EVs, raise the financial return on green-energy investment, and do a whole lot of other things to accelerate the transition from carbon during the next decade. Importantly, that law incentivizes green energy adoption without overtly penalizing anybody who still uses fossil fuels.

Anybody who recognizes the need to forestall global warming wants to curtail the burning of carbon as quickly as possible. But there can be drastic downsides to doing it too fast if it causes consumer distress or other unexpected disruptions.

President Biden learned the political peril of spiking energy prices in 2022, when gasoline prices hit $5 per gallon amid a broader surge in inflation. Biden’s popularity plummeted and never recovered.

Biden is a vocal green-energy advocate who canceled the federal permit for the Keystone XL oil pipeline as one of his first acts as president, in 2021. Biden’s green-energy policies weren’t the cause of spiking oil and gas prices in 2022, which mainly happened because of strengthening post-COVID demand and shaky supply. But many voters thought rising energy prices were Biden's fault anyway, since Biden had trash-talked fossil fuels and vowed to eliminate them. It wasn’t much of a stretch to believe Biden’s hostility to fossil fuels had somehow limited supply and pushed prices up.

Taken to the extreme, a forced phaseout of fossil fuels that jacked up energy prices for consumers could easily trigger a backlash that would promptly send the offending politicians hurtling from office. Americans broadly recognize the dangers posed by climate change, but that doesn't mean they're ready to pay through the nose for solutions.

America’s fossil-fuel producers have given Biden an inadvertent gift by following the market’s lead and drilling more as higher prices allow them to make better profits. Biden, awkwardly, can’t brag about this without alienating core elements of his liberal base who want to see fossil fuels disappear. But for now, we are moving down the road from brown to green and it’s not a terrible ride.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman.

Click here for politics news related to business and money

Read the latest financial and business news from Yahoo Finance