In his inaugural address back in January 2009, President Obama waxed eloquent about his vision of harnessing “the sun and the winds and the soil to fuel our cars and run our factories”.

Achieving energy independence for the US through alternative fuel is a noble goal, both for national security and biospheric survival. But little was then said about that goal for several years and, when it finally was, that vision had morphed beyond recognition.

It was no longer about renewables, but about more fossil fuels. The unlikely hero was fracking natural gas, and investments poured in from those who would benefit the most: the major oil and gas companies.

The break-even level for fracking in the US has been estimated by the industry at about $75-80 per barrel. Of course, oil prices since 2010 had been comfortably above $100 most of the time, so oil and gas multinationals and their bankers eagerly placed their bets. Does this sound familiar? Heard of the housing bubble?

Housing prices had been rising for most of the millennial decade when, in 2007, mortgage originators structured collateralised debt obligations that were tranched and rated by agency analysts based on modelled scenarios with continually rising housing prices. The rest is history, and so too is US fracking. History repeats many lessons, but it does not repeat price trends.

Saudi Arabia and Organisation of the Petroleum Exporting Countries’ overt strategy is to put big shale out of business, and their targets are clear: they are producing enough crude to keep prices below $75-80/bbl. They seem eminently comfortable with the idea of doing so because their production costs are closer to $5/bbl.

All of the above is reasonably clear and needs no genius to forecast. The bit that we don’t know is how much money governments will waste this time, shoring up this latest economic failure because they now think that oil and gas companies are also “too big to fail”.

Time and time again, when confronted with economic crises caused by bad thinking and worse investment, governments have thrown away the neo-classical economics textbook that they swear by – the one that tells us that markets are there to punish the misallocation of capital. They resort instead to throwing public resources (read: your taxes and mine) at failed banks, failed insurance companies (AIG), failed car companies (General Motors), indeed anything big that fails.

So why not failed oil and gas companies? Well, so far oil and gas explorers and producers are well capitalised through years of profitable high-margin operations based on low-cost drilling concessions, effective exploration and high oil prices. But none of these features holds true anymore, so my guess is that the US and other governments will soon have to make a hard decision: earn the wrath of society by doing what they have always done – bailing out their friends in big business – or admit that they got energy policy wrong and make late and painful changes.

Obama’s 2009 inaugural address was correct: the right energy strategy is investment in alternative fuels, not in more fossil fuels. The right energy policy would have been to reduce and gradually eliminate the estimated $1tn of price and production subsidies given annually to fossil fuels (the number rises to an estimated $2tn if, like the International Monetary Fund, you include the economic costs of greenhouse gas emissions).

Instead, as regards energy, we are entering 2015 with clouded vision, wrong strategy, confused policies and bad investments. I have a simple request for governments in 2015: please do not rescue those who have made bad economic decisions yet again, just let them fail. It will be good for the economy and jobs, and even better for our safe planetary existence.

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