The People of America's Oil and Natural Gas Indusry

Asked and Answered

Mark Green

Mark Green
Posted July 7, 2011

President Obama's Twitter town hall yesterday was pretty neat - the Tweeter-in-Chief fielding questions from the public on a range of issues, including some on energy. The president trumpeted renewable energies while saying America needs to reduce dependence on oil. More on that below. First, some interesting context on renewables, from a live chat held last week by the Energy Department. Dr. Arun Majumdar, director of the department's Advanced Research Projects Agency-Energy, responded to the public's emails and Tweets for about 45 minutes. You can check out the video here. Key takeaways on renewables:

  • Futuristic technologies, including biofuels, electrofuels and powerful car batteries, remain just that: in the future. "The technologies that are required to make us secure ... all of them do not quite exist today," Dr. Majumdar said.
  • To impact nationally, car batteries must double the energy intensity of current lithium batteries, at one-third the cost, Majumdar said. "That battery really does not exist today," he said. "Not just in the United States but anywhere in the world."
  • Electrofuels - using microorganisms to harness chemical or electrical energy to convert carbon dioxide into liquid fuels - are 10 to 20 years from hitting the market.

Given the above, the most obvious question is: So, what's going on with oil and natural gas, which according to the Energy Information Administration (EIA) is supplying most of our energy right now and will continue to do so into the 2030s? Majumdar fielded a couple questions like that:

Why not cut red tape for domestic energy production? Won't cheaper energy and more jobs lead to alternative energy? Majumdar:

"In the last few years we have increased our domestic oil production significantly, and that has led to a lot of jobs. But in the long term we have to realize we have to reduce the imports of oil because that, as I mentioned, is a source of national security as well as economic prosperity. And to have only one fuel in the transportation sector, which is oil, as I said, makes us vulnerable. So we need options."

Two points. First, the administration regularly cites increases in domestic oil production that have little to do with its policies. Production upticks in 2009 and the first part of 2010 resulted from decisions made by the Clinton and Bush administrations. In fact, this administration's anti-drilling policies in the Gulf of Mexico are expected to cause production there to be off 25 percent from 2010 levels by 2012. Onshore increases are helping offset that, but it's occurring in places like North Dakota, on private lands not controlled by the administration.

Second, the administration's basic formulation is faulty. We need policies focused on developing all energy sources, not policies that are focused on alternatives to oil - which, again, the EIA says will furnish most of our energy (along with natural gas) decades into the future. Sure, pursue realistic, workable renewables - the oil and gas industry invested more than $58 billion from 2000 to 2008 in low- and no-carbon technologies, more than either the government or the rest of the private sector combined - but don't take abundant and accessible domestic oil off the table. We need both.

All of these technologies sound great, but why aren't we doing more to tap into resources we already have here, such as drilling domestically? Majumdar repeated the administration's claim about domestic oil production increases then added:

"We have to think not just of the short term but of the long term. And one of the things the United States has done in the past is that when the oil prices go up we hit the panic button, and when the oil prices go down we hit the snooze button. And that is no way of planning for our future. So when I look at domestic oil production, yes, that is absolutely important for the short term. We need to make our vehicles more efficient so that they use less imported oil. ... But in the long term we have to have options."

Majumdar is right about public reactions to oil prices. Policy planning needs to transcend fluctuations in the global crude market. Still, by his reckoning, renewable energy technologies on a national, affordable scale are a ways off, which is why oil and natural gas will play a vital role into the future. The challenge is to make decisions now that will ensure that energy comes on line.

Access to U.S. oil reserves and a continued partnership with Canada, our largest supplier of foreign oil, could provide 92 percent of our liquid fuel needs by 2030. To get there we will need to tap the Arctic National Wildlife Refuge, deepwater reserves off the Atlantic and Pacific coasts and in the Eastern Gulf - all of which administration policies are keeping off-limits.

What is the Department of Energy doing right now to bring down prices at the pump?Majumdar said DOE doesn't have any control over crude oil prices, the key factor in gasoline prices. Government must work on ways to reduce dependence on foreign oil, he said, pointing to the administration's recent decision to release 30 million barrels of oil from the Strategic Petroleum Reserve.

Sorry, but there's so much more that can be done, right now, than just waiting on new technologies or dumping a token amount of oil from the strategic reserve. The government can release its choke hold on Gulf deepwater well permits, create new access to U.S. oil and natural gas reserves and approve construction of the Keystone XL pipeline that will bring oil from Canada's oil sands region to U.S. refiners.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.