Economics’ Gregor Semieniuk Testifies Before Senate Budget Committee on Stranded Fossil Fuel Assets

Gregor Semieniuk, assistant research professor in the Department of Economics and the Political Economy Research Institute (PERI), testified before the Senate Committee on the Budget March 29 during a hearing on “The Cost of Oil Dependence in a Low-Carbon World.”

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Semieniuk discussed his 2022 research that found that current oil and gas assets may be overvalued by more than $1 trillion, a figure that exceeds the subprime housing mispricing that triggered the 2007 financial crisis. He led an international team of researchers to map the financial shocks associated with mispriced oil and gas reserves, examining the economics of 43,439 oil and gas production assets from the oil companies that directly own them via financial intermediaries, such as banks and investment funds, through to the ultimate owners.

“The current undersupply of fossil fuels may suggest that stranded assets are just an illusion. But it is precisely the uncertainty about future demand for their product that makes oil and gas companies more reluctant to proceed with new projects,” Semieniuk testified during his opening remarks. “Capitalist economies are unrivalled in their ability to supply an expanding market. The same cannot be said of a declining one. Energy security in the short and long-run must consider a robust diversification away from relying mainly on fossil fuels whose prices will only become more volatile in a declining global market.”

Other witnesses during the full committee hearing included: Claudio Galimberti, senior vice president & North America research director of Rystad Energy; Daniel Raimi, fellow and director of Equity in the Energy Transition Initiative Resources for the Future; Benjamin Zycher, senior fellow of the American Enterprise Institute; and Lucian Pugliaresi, president of the Energy Policy Research Foundation.

The complete hearing and a transcript of Semieniuk’s opening statement can be found on the Senate Budget Committee website.