Posted July 15, 2014
A couple of highlights from the first day of the U.S. Energy Information Administration’s (EIA) annual energy conference, both of which can be used to underscore the need for policies that help sustain and grow America’s energy revolution.
First, International Energy Agency (IEA) Executive Director Maria van der Hoeven suggested exuberance over the U.S. energy boom has risks because energy security is more than just ample supply:
“In periods of abundance we must challenge ourselves with questions. And so I ask you, is your energy security as security as you or I think? … Energy security is about much more than supply. … Although things look bright at first sight, there’s no time for complacency.”
Van der Hoeven said when IEA was born 40 years ago the founders were focused on stockpiling supplies and finding ways around market disruptions:
“But the world has changed dramatically since the founding of the IEA, driving us to evolve and develop our capabilities accordingly. Oil demand patterns have shifted, and where the IEA members once accounted for around three-quarters of global demand they now account for less than half. And this requires that we engage more closely with emerging economies like China and India.”
She said projections showing the U.S. energy surge plateauing in the next decade and that meeting future energy demand growth will focus on the holders of conventional reserves – chiefly, the Middle East. Regional volatility could chill investments needed to meet demand in the 2020s, she said.
IHS Vice Chairman Daniel Yergin depicted the U.S. energy revolution a little differently:
“We’re still very much a part of the global energy market, and the dangers are manifest. I’m convinced were it not for these last few years in the United States we would be looking at an oil crisis. We would have panic in the public, we would have angry voters, we would have inflamed congressional hearings and we would have the U.S. economy falling back into a recession. So what’s happened in these last few years in terms of our energy supply has been very important in a world in which there are a lot of risks out there. … The U.S. is in a much, much, much better position than we would have anticipated a half-decade ago.”
As such, Yergin said the U.S. could now export crude oil – to prevent the stranding of domestic light sweet crude by a refining sector that’s set up mainly to process heavier crudes and to harness our energy wealth in the global market:
“Lifting the ban on crude exports would be a signal of U.S. commitment to global energy security. For four decades the U.S. government urged other countries’ free flow of energy but it didn’t matter that we had a ban on U.S. export of crude oil. But you know what, it matters now. … All the rationales for the export ban are gone, but the ban is still there.”
An IHS study published earlier this year showed positive impacts from lifting the crude export ban, Yergin said – stimulated production to a peak of more than 14.3 million barrels per day (compared today’s 8.3 million barrels/day output), generation of more than $1 trillion in additional investment and 1.5 million added jobs.
From different perspectives, the speakers’ remarks indicate the need for greater access to domestic oil and natural gas reserves and policies that encourage U.S. energy development. World energy demand will continue to grow, as reports by IEA, ExxonMobil, BP and others project. So harnessing American energy is critical in a global sense, because additional supplies put downward pressure on crude prices while helping energy markets absorb shocks from disruptions.
Yergin is right: The United States is in a much better place today because of its domestic energy revolution – much of it developed from shale and other tight-rock formations using advanced hydraulic fracturing and horizontal drilling. Choosing energy policies that foster safe and responsible development is key to keeping that revolution going, fueling economic growth in this country while creating new opportunities to be a world energy leader through the free trade of crude oil and natural gas.
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.