The Financial Times [subscription] is reporting that the US is poised to become the world’s largest producer of liquid petroleum (oil and natural gas liquids):
US production of oil and related liquids such as ethane and propane was neck-and-neck with Saudi Arabia in June and again in August at about 11.5m barrels a day, according to the International Energy Agency, the watchdog backed by rich countries.
With US production continuing to boom, its output is set to exceed Saudi Arabia’s this month or next for the first time since 1991. [...]
Rising oil and gas production has caused the US trade deficit in energy to shrink, and prompted a wave of investment in petrochemicals and other related industries. [...] It is also having an impact on global security. Imports are expected to provide just 21 per cent of US liquid fuel consumption next year, down from 60 per cent in 2005.
The reason? Fracking. As Walter Russell Mead points out:
With productivity continuing to rise, the United States has a chance to become the single biggest producer of crude oil sometime in the near future. If you had said that a decade ago, you would’ve been laughed at and called a fool. What a difference fracking makes.
Indeed. The “peak oil” pundits were sure we were on the precipice of running out of oil. Now, it seems, the sky is indeed the limit. Which is why it makes little sense, given the state of climate science, that our President is busily engaged via the UN and other domestic agencies, in throttling back one of the most economically viable growth engines the American economy has at the moment (and for the foreseeable future).
Instead of working on a policy to limit future use of hydrocarbons, this White House should be pushing a policy that helps us safely and sustainably exploit these assets for all. Additionally, while petroleum is indeed a global commodity, this level of production would go a long way toward the promise of energy independence in time of crisis. It helps remove oil as a weapon of choice by various less than friendly states and allies of convenience.
Two winners for the US: economic growth and national security.
Instead we get an attempt to establish an new tax based on specious science.
Sort of par for the course, no pun intended.
That is the key. And, given the re-election of Barack Obama, it may not be very likely:
A shale oil boom means the U.S. will overtake Saudi Arabia as the world’s largest oil producer by 2020, a radical shift that could profoundly transform not just the world’s energy supplies, but also its geopolitics, the International Energy Agency said Monday.
In its closely watched annual World Energy Outlook, the IEA, which advises industrialized nations on their energy policies, said the global energy map “is being redrawn by the resurgence in oil and gas production in the United States.”
The assessment is in contrast with last year, when it envisioned Russia and Saudi Arabia vying for the top position.
“By around 2020, the United States is projected to become the largest global oil producer” and overtake Saudi Arabia for a time, the agency said. “The result is a continued fall in U.S. oil imports (currently at 20% of its needs) to the extent that North America becomes a net oil exporter around 2030.”
This major shift will be driven by the faster-than-expected development of hydrocarbon resources locked in shale and other tight rock that have just started to be unlocked by a new combination of technologies called hydraulic fracturing.
And there’s the rub. Fracking has been demonized by the enviros and the Democrats. Nevermind the fact that in this nation alone it has been in use for 64 years and over a million wells have been drilled using it. This is not new technology despite the apparent belief by some that it is and that it is dangerous.
Environmental groups and some scientists say there hasn’t been enough research on fracking.
Right. 1948. A million wells. No history there.
EPA is publishing new regulations on fracking which they claim will not impede production. Any bets out there concerning the truth of that assertion?
We talk about “energy independence” often and others rightfully point out that oil is a global market and that it is difficult to become truly independent. Given these new finds, I’m not so sure that argument is still valid. Or at least it isn’t as valid as it was when we believed we only sat on top of 2% of the world’s reserves.
Let’s be clear here , the possibility of increased fossil fuel production, to the point of defacto energy independence flies in the face of everything the left wants to do in the energy sector. Anyone who doesn’t understand that has not been paying attention. We’ve seen it with this administration’s ban on off-shore drilling, putting areas of federal land off-limits and slow-walking the permit process. There is no reason to believe that will change. None.
We have the possibility to strategically help the country, create thousands if not millions of jobs, create revenue for government and begin to help a struggling economy get off it’s knees and at least begin staggering forward in a positive direction. If the past four years is any indication, that’s an opportunity that will likely be passed up or at best, minimized.
Oh, this administration will talk a good game, it always does. And it will claim it is interested in “all of the above” when it comes to energy. But action speaks louder than empty words and the action we’ve seen from Obama, et. al., says exactly the opposite is true.
We’re sitting on potential energy resources that could be a veritable game changer. One problem. With a government in place that loves to pick winners and losers, it looks upon fossil fuel as a loser.
The results, unfortunately, are predictable.
Did most of you know about this?
The U.S. Energy Information Administration’s (EIA) June energy report says that energy-related carbon dioxide fell to 5,473 million metric tons (MMT) in 2011.
That’s down from a high of 6,020 MMT in 2007, and only a little above 1995’s level of 5,314 MMT.
Better yet, emissions in the first quarter of 2012 fell at an even faster rate — down 7.5% from the first quarter of 2011 and 8.5% from the same time in 2010. If the rest of 2012 follows its first-quarter trend, we may see total energy-related carbon dioxide emissions drop to early-1990s levels.
Wow. Victory for the enviro crowd, yes? Regulation has succeeded, right? The government has turned the tide?
Nope. In fact it has nothing to do with the enviro crowd, government or regulation.
Two dirty words: Hydraulic fracking. Two more for good measure: Natural gas. And the dirtiest word of all: Markets.
Those three have combined, via a price point that has stimulated demand and made the conversion of coal plants economical to drive down emissions as they produce electricity more cheaply and efficiently. This trend began in 2007 and is now having a real effect:
Increasingly, power plants are turning to natural gas because it has become abundant, and therefore cheap. And though technology is improving our ability to reduce emissions from coal usage, natural gas is still a much cleaner source.
Natural gas, given the extensive finds and the exploitation, is much cheaper than coal now. In fact:
Indeed, natural gas has just passed an important milestone. As noted by John Hanger, energy expert and former secretary of the Pennsylvania Department of Environmental Protection: "As of April, gas tied coal at 32% of the electric power generation market, nearly ending coal’s 100-year reign on top of electricity markets."
That’s how it works in markets, or is supposed too. The fact that emissions are down is an actual side benefit of the process. And it is a process that has managed to work despite government and environmental groups like the Sierra Club’s interference or attempted interference in the process (the Sierra Club has declared war on natural gas and fracking after accepting millions in previous years from the natural gas industry).
It is a part of the creative destruction of the capitalist process. Coal will still have its uses, but just as it was replaced as a primary fuel for heating homes last century, it is now being replaced as a primary fuel for generating electricity for the same reason – there is a cheaper and more efficient fuel (which also happens to have fewer emissions) that is easier to produce and deliver than coal.
At some point coal producers will either have to reinvent themselves or find something else to do. And on the other side, opportunities will expand within the natural gas industry as more and more demand builds.
But shhhhh. Don’t want anyone knowing this all happened because of markets. Why that would hurt the argument that it requires government intrusion, regulation and the pressure of environmental groups to make things like this happen.
Can’t have that.
A day after the White House said that the State Department would make the call, President Obama has decided he’ll make the ultimate decision on the Keystone XL pipeline which would bring petroleum product from the tar sands of Canada to the US.
This has become a cause the “climate change” crowd has embraced and have tried to paint as one which would supposedly increase “global warming”. Of course the actual science of “global warming” doesn’t support the contention that the earth is warming, however that is a part of the science that these folks have decided to ignore.
The fact that Obama has chosen to make the decision himself may confuse some – why not let the State Department, who makes decisions such as this when a foreign nation is involved? Well that’s what makes me uneasy. There’s an election coming and his environmental base has been very disappointed in him. Read between the lines of the statement he made and the answer he provided to a question:
“We need to encourage domestic oil and natural gas production,” Obama added. “We need to make sure that we have energy security and aren’t just relying on Middle East sources. But there’s a way of doing that and still making sure that the health and safety of the American people and folks in Nebraska are protected, and that’s how I’ll be measuring these recommendations when they come to me.”
The “but” is rather pregnant isn’t it?
Then the question concerning jobs and the promise of thousands of jobs if the pipeline is approved. Will that have an effect on his decision?
“It does, but I think folks in Nebraska like all across the country aren’t going to say to themselves, ‘We’ll take a few thousand jobs if it means that our kids are potentially drinking water that would damage their health or rich land that’s so important to agriculture in Nebraska are being adversely affected,’” Obama said, adding, “because those create jobs, and you know when somebody gets sick that’s a cost that the society has to bear as well. So these are all things that you have to take a look at when you make these decisions.”
For your information, petroleum pipelines crisscross this country. In fact, more than 168,000 miles of petroleum pipelines have been in operation, safely, for decades. 85% of all petroleum product is moved by pipeline.
So this isn’t about “safety” – the product has been moved in safety for years. It’s much like the fracking argument. It is unfounded and based in fear of something that isn’t true. And like the fracking argument, the opposition likes to try to frame the procedure as something new and dangerous. Well it isn’t new. Fracking has been in use since 1948 very safely and over a million wells have been developed using it.
The argument used by opponents of the Keystone XL pipeline is that the petroleum shipped in that pipeline is more corrosive and dangerous than regular petroleum product. The Association of Oil Pipelines answers that question:
Opponents have also wrongly suggested that crude from the Canadian oil sands is somehow more corrosive than other heavy crudes, which have been moved safely for decades. It is not. The oil sands may be produced differently, but the product readied for pipeline transportation will be behave like any other heavy crude oil. There is simply no evidence pipelines carrying diluted bitumen behave any differently than a pipeline carrying conventional crude oil, or that diluted bitumen is more corrosive than other crude oils. Pipeline operators don’t build multi-billion dollar assets to then destroy them with a corrosive product.
So Obama gets to decide between jobs and increased energy security and politics. We currently get 400,000 barrels a day from the oil sands in Alberta. This pipeline promises to add another 700,000 barrels a day from a secure source. Or will Canada be forced to build a pipeline to the west coast and ship it to China?
This should be a no brainer. Jobs along with safe transportation of a vital commodity which powers our economy is a winner for the nation. But this is a president in political trouble and desperately trying to shore up his eroding base.
Will he put the well being and energy security of America and Americans first?
Or will he play the politics card?
Unfortunately, the latter is much more probable than the former, given how political Obama is. Don’t be surprised if he turns down jobs and energy security for the promise of increased political support from his base.