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A smooth transition to clean energy will require coordinating on oil prices — just not the way Scott Sheffield was doing it.
The Federal Trade Commission earlier this month threw sand in the gears of one of several big oil company deals currently in the works, the $60 billion acquisition of shale oil company Pioneer by Exxon. While the FTC didn’t block the sale, it said that Pioneer’s chief executive, Scott Sheffield, could not join Exxon’s board, as proposed in the merger agreement, because of his role in seeking to coordinate oil production and push up prices.
It was yet another Rorschach test of the mid-transition — oil folk saw regulator overreach or pettiness under a Democratic administration, while climate campaigners saw shameless profiteering by the oil industry. What it really reveals is more complex: The illusion of laissez-faire oil markets; the disingenuousness (if not hypocrisy) of the U.S. oil industry; and the need for U.S. policymakers to take a much more interventionist stance in oil markets.
First, the FTC complaint. Sheffield, fêted in the oil world as one of the key instigators of the U.S. shale oil boom, has called on peers in the sector to refrain from drilling when prices were low. The commission also quoted public remarks by Sheffield referring to U.S. oil companies “staying in line,” being disciplined in their production, and being punished by shareholders if they sought to grow production.
He went further than that, though, according to the FTC. In a heavily redacted section of the complaint, the Commission describes Sheffield meeting with OPEC officials and communicating with them by WhatsApp. “If Texas leads the way, maybe we can get OPEC to cut production. Maybe Saudi and Russia will follow. That was our plan,”he said in one text message cited by the Commission. He added: “I was using the tactics of OPEC+ to get a bigger OPEC+ done.” Pioneer issued a statement saying that circumventing competition rules was “neither the intent nor the effect” of Sheffield’s comments and pointing to Pioneer’s role in increasing U.S. production.
Coordinating on prices, however, is the norm in the history of oil markets — even in the U.S. It shouldn’t be so shocking that the purportedly free market-loving oil industry would engage in this kind of behavior.
A lot of Sheffield’s activity mentioned by the FTC took place from around 2020 to 2023, when oil demand was still uncertain thanks to Covid. Even before then, the U.S. shale industry, which had boomed through the late 2010s, was under pressure from institutional investors, frustrated as all the new supply undermined their profits. Exxon, whose antecedent Rockefeller famously took control of transport to manage the oil market, is so big and cash-rich that it can largely ride out market fluctuations; the smaller and newer shale oil producers, reliant on increasingly impatient investors, could not.
No wonder Sheffield was vocal about restricting supply: He had a large company and a high profile among a sea of smaller players that were fracking madly even as prices fell.
Oil prices are notoriously volatile, which serves neither producers nor consumers. If prices are too low, the industry logic goes, no-one invests. Too high, and there’s a risk that demand for the stuff falls — especially if it prompts a recession. To keep prices in a sweet spot, a good chunk of the market has to be prepared to refrain from pumping. Turning the taps on and off is a role that Saudi Arabia and fellow OPEC petrostates have taken for decades. The nature of shale oil means it is a “swing producer” that can switch up and down its output with relative ease compared to other producers.
The market dynamics changed quickly when Russia invaded Ukraine in early 2022. Since then, U.S. oil producers have been pumping more than ever, to the point where the country is now the world’s biggest producer. None of this has stopped the industry from continuing to loathe the Biden administration, of course. (Sheffield himself said in 2021 that the administration was trying “to slow down U.S. drilling in any way they can.”)
The U.S. government is the one actor with enough power to influence global oil demand that has largely sat on its hands. The oil industry often engages in a kind of collective delayed gratification to keep oil prices in a sweet spot: high enough to maximize profits, but not so high that households and businesses start cutting back on their fuel use. Far less effort has gone into a kind of reverse strategy. There have been few attempts to reduce supply without disruptive price volatility — the kind of government inaction that pits voters against lawmakers and hurts households that really feel the pinch from higher gasoline prices.
Having intervened extensively in the preceding decades, during the 1980s, the U.S. government backed away from the complex price controls of the Nixon presidency and the demand-curtailing measures of Carter’s. With OPEC’s strategy being fairly straightforward, a couple of decades of relative stability followed, along with the assumption that the market would self-correct whenever prices went too high for consumers or too low for producers. Bassam Fattouh of Oxford Institute for Energy Studies argued that it was the perception of a self-correcting supply-demand dynamic that “stabilized long term expectations about oil prices”in that period.
The “mid-transition” idea, developed by academics Emily Grubert and Sara Hastings-Simon in a 2022 paper, asserts that the process of decarbonization involves a drawn-out, messy, liminal phase, during which changes to energy costs and supply will shape a society’s perception of clean energy so much that negative experiences like price spikes or supply interruptions will undermine political support for the transition.
In 2023, the Biden administration broke the U.S. government’s longstanding precedent and began intervening in oil prices with an eye beyond manipulating the immediate consumer price. It announced a target price for buying several hundred million barrels of oil to restock the Strategic Petroleum Reserve, which had been depleted after the invasion of Ukraine sent prices spiking. By pledging to buy crude whenever the price was between $67 and $72 a barrel, it would do what Employ America, a think tank, had proposed: Set a floor under prices that would help U.S. producers, as well as a ceiling that would avoid pain at the pump.
“Mid-transition” is a relatively new concept, but it harks back to a more established phrase in climate policy: “smooth transition,” which describes a pathway to decarbonization that is steady but not disruptive. Stimulating or restraining oil production in a way that stabilizes oil investment and prices — if done effectively and with the right intentions — is a necessary condition for such smoothness. Sheffield and other producers, including OPEC+ members, have for decades sought to manage oil supply to ensure that price spikes don’t disrupt oil’s future. For all that the U.S. oil industry castigates the Biden administration, they are actually pursuing the same goal, just with a different view of the end game.
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Though it might not be as comprehensive or as permanent as renewables advocates have feared, it’s also “just the beginning,” the congressman said.
President-elect Donald Trump’s team is drafting an executive order to “halt offshore wind turbine activities” along the East Coast, working with the office of Republican Rep. Jeff Van Drew of New Jersey, the congressman said in a press release from his office Monday afternoon.
“This executive order is just the beginning,” Van Drew said in a statement. “We will fight tooth and nail to prevent this offshore wind catastrophe from wreaking havoc on the hardworking people who call our coastal towns home.”
The announcement indicates that some in the anti-wind space are leaving open the possibility that Trump’s much-hyped offshore wind ban may be less sweeping than initially suggested.
In its press release, Van Drew’s office said the executive order would “lay the groundwork for permanent measures against the projects,” leaving the door open to only a temporary pause on permitting new projects. The congressman had recently told New Jersey reporters that he anticipates only a six-month moratorium on offshore wind.
The release also stated that the “proposed order” is “expected to be finalized within the first few months of the administration,” which is a far cry from Trump’s promise to stop projects on Day 1. If enacted, a pause would essentially halt all U.S. offshore wind development because the sought-after stretches of national coastline are entirely within federal waters.
Whether this is just caution from Van Drew’s people or a true moderation of Trump’s ambition we’ll soon find out. Inauguration Day is in less than a week.
Imagine for a moment that you’re an aerial firefighter pilot. You have one of the most dangerous jobs in the country, and now you’ve been called in to fight the devastating fires burning in Los Angeles County’s famously tricky, hilly terrain. You’re working long hours — not as long as your colleagues on the ground due to flight time limitations, but the maximum scheduling allows — not to mention the added external pressures you’re also facing. Even the incoming president recently wondered aloud why the fires aren’t under control yet and insinuated that it’s your and your colleagues’ fault.
You’re on a sortie, getting ready for a particularly white-knuckle drop at a low altitude in poor visibility conditions when an object catches your eye outside the cockpit window: an authorized drone dangerously close to your wing.
Aerial firefighters don’t have to imagine this terrifying scenario; they’ve lived it. Last week, a drone punched a hole in the wing of a Québécois “Super Scooper” plane that had traveled down from Canada to fight the fires, grounding Palisades firefighting operations for an agonizing half-hour. Thirty minutes might not seem like much, but it is precious time lost when the Santa Ana winds have already curtailed aerial operations.
“I am shocked by what happened in Los Angeles with the drone,” Anna Lau, a forestry communication coordinator with the Montana Department of Natural Resources and Conservation, told me. The Montana DNRC has also had to contend with unauthorized drones grounding its firefighting planes. “We’re following what’s going on very closely, and it’s shocking to us,” Lau went on. Leaving the skies clear so that firefighters can get on with their work “just seems like a no-brainer, especially when people are actively trying to tackle the situation at hand and fighting to save homes, property, and lives.”
Courtesy of U.S. Forest Service
Although the Super Scooper collision was by far the most egregious case, according to authorities there have been at least 40 “incidents involving drones” in the airspace around L.A. since the fires started. (Notably, the Federal Aviation Administration has not granted any waivers for the air space around Palisades, meaning any drone images you see of the region, including on the news, were “probably shot illegally,” Intelligencer reports.) So far, law enforcement has arrested three people connected to drones flying near the L.A. fires, and the FBI is seeking information regarding the Super Scooper collision.
Such a problem is hardly isolated to these fires, though. The Forest Service reports that drones led to the suspension of or interfered with at least 172 fire responses between 2015 and 2020. Some people, including Mike Fraietta, an FAA-certified drone pilot and the founder of the drone-detection company Gargoyle Systems, believe the true number of interferences is much higher — closer to 400.
Law enforcement likes to say that unauthorized drone use falls into three buckets — clueless, criminal, or careless — and Fraietta was inclined to believe that it’s mostly the former in L.A. Hobbyists and other casual drone operators “don’t know the regulations or that this is a danger,” he said. “There’s a lot of ignorance.” To raise awareness, he suggested law enforcement and the media highlight the steep penalties for flying drones in wildfire no-fly zones, which is punishable by up to 12 months in prison or a fine of $75,000.
“What we’re seeing, particularly in California, is TikTok and Instagram influencers trying to get a shot and get likes,” Fraietta conjectured. In the case of the drone that hit the Super Scooper, it “might have been a case of citizen journalism, like, Well, I have the ability to get this shot and share what’s going on.”
Emergency management teams are waking up, too. Many technologies are on the horizon for drone detection, identification, and deflection, including Wi-Fi jamming, which was used to ground climate activists’ drones at Heathrow Airport in 2019. Jamming is less practical in an emergency situation like the one in L.A., though, where lives could be at stake if people can’t communicate.
Still, the fact of the matter is that firefighters waste precious time dealing with drones when there are far more pressing issues that need their attention. Lau, in Montana, described how even just a 12-minute interruption to firefighting efforts can put a community at risk. “The biggest public awareness message we put out is, ‘If you fly, we can’t,’” she said.
Fraietta, though, noted that drone technology could be used positively in the future, including on wildfire detection and monitoring, prescribed burns, and communicating with firefighters or victims on the ground.
“We don’t want to see this turn into the FAA saying, ‘Hey everyone, no more drones in the United States because of this incident,’” Fraietta said. “You don’t shut down I-95 because a few people are running drugs up and down it, right? Drones are going to be super beneficial to the country long term.”
But critically, in the case of a wildfire, such tools belong in the right hands — not the hands of your neighbor who got a DJI Mini 3 for Christmas. “Their one shot isn’t worth it,” Lau said.
Editor’s note: This story has been updated to reflect that the Québécois firefighting planes are called Super Scoopers, not super soakers.
Plus 3 more outstanding questions about this ongoing emergency.
As Los Angeles continued to battle multiple big blazes ripping through some of the most beloved (and expensive) areas of the city on Friday, a question lingered in the background: What caused the fires in the first place?
Though fires are less common in California during this time of the year, they aren’t unheard of. In early December 2017, power lines sparked the Thomas Fire near Ventura, California, which burned through to mid-January. At the time it was the largest fire in the state since at least the 1930s. Now it’s the ninth-largest. Although that fire was in a more rural area, it ignited for some of the same reasons we’re seeing fires this week.
Read on for everything we know so far about how the fires started.
Six major fires started during the Santa Ana wind event last week:
Officials are investigating the cause of the fires and have not made any public statements yet. Early eyewitness accounts suggest that the Eaton Fire may have started at the base of a transmission tower owned by Southern California Edison. So far, the company has maintained that an analysis of its equipment showed “no interruptions or electrical or operational anomalies until more than one hour after the reported start time of the fire.” A Washington Post investigation found that the Palisades Fire could have risen from the remnants of a fire that burned on New Year’s Eve and reignited.
On Thursday morning, Edward Nordskog, a retired fire investigator from the Los Angeles Sheriff’s Department, told me it was unlikely they had even begun looking into the root of the biggest and most destructive of the fires in the Pacific Palisades. “They don't start an investigation until it's safe to go into the area where the fire started, and it just hasn't been safe until probably today,” he said.
It can take years to determine the cause of a fire. Investigators did not pinpoint the cause of the Thomas Fire until March 2019, more than two years after it started.
But Nordskog doesn’t think it will take very long this time. It’s easier to narrow down the possibilities for an urban fire because there are typically both witnesses and surveillance footage, he told me. He said the most common causes of wildfires in Los Angeles are power lines and those started by unhoused people. They can also be caused by sparks from vehicles or equipment.
At more than 40,000 acres burned total, these fires are unlikely to make the charts for the largest in California history. But because they are burning in urban, densely populated, and expensive areas, they could be some of the most devastating. With an estimated 9,000 structures damaged as of Friday morning, the Eaton and Palisades fires are likely to make the list for most destructive wildfire events in the state.
And they will certainly be at the top for costliest. The Palisades Fire has already been declared a likely contender for the most expensive wildfire in U.S. history. It has destroyed more than 5,000 structures in some of the most expensive zip codes in the country. Between that and the Eaton Fire, Accuweather estimates the damages could reach $57 billion.
While we don’t know the root causes of the ignitions, several factors came together to create perfect fire conditions in Southern California this week.
First, there’s the Santa Ana winds, an annual phenomenon in Southern California, when very dry, high-pressure air gets trapped in the Great Basin and begins escaping westward through mountain passes to lower-pressure areas along the coast. Most of the time, the wind in Los Angeles blows eastward from the ocean, but during a Santa Ana event, it changes direction, picking up speed as it rushes toward the sea.
Jon Keeley, a research scientist with the US Geological Survey and an adjunct professor at the University of California, Los Angeles told me that Santa Ana winds typically blow at maybe 30 to 40 miles per hour, while the winds this week hit upwards of 60 to 70 miles per hour. “More severe than is normal, but not unique,” he said. “We had similar severe winds in 2017 with the Thomas Fire.”
Second, Southern California is currently in the midst of extreme drought. Winter is typically a rainier season, but Los Angeles has seen less than half an inch of rain since July. That means that all the shrubland vegetation in the area is bone-dry. Again, Keeley said, this was not usual, but not unique. Some years are drier than others.
These fires were also not a question of fuel management, Keeley told me. “The fuels are not really the issue in these big fires. It's the extreme winds,” he said. “You can do prescription burning in chaparral and have essentially no impact on Santa Ana wind-driven fires.” As far as he can tell, based on information from CalFire, the Eaton Fire started on an urban street.
While it’s likely that climate change played a role in amplifying the drought, it’s hard to say how big a factor it was. Patrick Brown, a climate scientist at the Breakthrough Institute and adjunct professor at Johns Hopkins University, published a long post on X outlining the factors contributing to the fires, including a chart of historic rainfall during the winter in Los Angeles that shows oscillations between wet and dry years over the past eight decades.
But climate change is expected to make dry years drier and wet years wetter, creating a “hydroclimate whiplash,” as Daniel Swain, a pre-eminent expert on climate change and weather in California puts it. In a thread on Bluesky, Swain wrote that “in 2024, Southern California experienced an exceptional episode of wet-to-dry hydroclimate whiplash.” Last year’s rainy winter fostered abundant plant growth, and the proceeding dryness primed the vegetation for fire.
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Editor’s note: This story was last update on Monday, January 13, at 10:00 a.m. ET.