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JPMorgan CEO says Ukraine War Fallout Proves Essential Role of Natural Gas, Oil
For all the concern about climate change – a worry he shares – JPMorgan Chase & Co.’s chief executive said the world’s current and foreseeable energy needs cannot be met without natural gas and oil.
JPMorgan’s Jamie Dimon said Russia’s war in Ukraine amplified the significant role of both energy sources. He noted the surge in European demand for imports of U.S. LNG and other sources of liquefied natural gas following the onset of the conflict in February. The continent’s demand for oil from sources outside of Russia also jumped amid Western sanctions against the Kremlin in protest of the war.
By removing from the European market only some oil and gas from a key producer – Russia – demand for the fuels from other countries soared, punctuating the fuels’ collective necessity.
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“If the lesson was learned from Ukraine, we need cheap, reliable, safe, secure energy, of which 80% comes from oil and gas. And that number’s going to be very high for 10 or 20 years,” Dimon said during a CNBC interview on Tuesday (Dec. 6).
‘Road to Hell’
The head of the largest U.S. bank by assets had previously declined to join an industry pledge to cease lending to fossil fuel producers. He said in testimony before Congress that doing so would pave a “road to hell for America.”
Dimon said at that hearing in September that JPMorgan had no plans to halt the financing of oil and gas projects.
In the CNBC interview, Dimon said the U.S. and global economies should continue to pursue renewable fuel development and long-term goals to reach net-zero emissions. He said, however, the world needs oil and gas to power transportation and industrial activity, and to meet commercial and residential needs.
Elevated prices show this, Dimon said. For example, New York Mercantile Exchange natural gas futures hovered around $6.00/MMBtu intraday on Thursday but soared above $9.00 and near 12-year highs amid peak summer demand. Continued gains in production would moderate prices and meet energy needs, he said.
Abandoning oil and gas, Dimon said, would not only cause widespread energy shortages and economic upheaval in the United States, but it would also force other heavily populated countries such as India and China to ramp up consumption of coal. This would ultimately drive up carbon emissions and hasten climate change, Dimon argued.
U.S. exploration and production companies are increasing production to meet strong domestic and global demand.
The Energy Information Administration (EIA) said in its latest Short-Term Energy Outlook it expects U.S. natural gas production to average 100.4 Bcf/d next year. The agency estimated 2022 production would average 98.1 Bcf/d, though it noted output reached record highs above 100 Bcf/d this fall. EIA’s latest Weekly Petroleum Status Report showed oil output for the period ended Dec. 2 climbed 100,000 b/d week/week to 12.2 million b/d. That matched a 2022 high mark and far surpassed the year earlier level of 11.7 million b/d.
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