The American energy renaissance

  • 28 December 2017
  • NormanL
The American energy renaissance

For years, environmentalists and the Democratic party have alleged that the only way for the U.S. to meet its energy needs was to ditch the fossil fuels habit, and embrace costly alternative sources such as solar, wind, algae, and so on. But as this item from Axios notes, the last decade has seen the U.S. become a force in the global energy market...particularly in those old standbys, oil and gas:

1. The oil boom

America's oil production has nearly doubled over the last decade, and we became the world's biggest oil producer a few years ago, thanks to drilling technologies like fracking and horizontal drilling. This dynamic has complicated policies predicated on limited oil supplies, including a federal ethanol mandate and fuel-efficiency standards for cars.

On the geopolitical front, the U.S. is now becoming a swing producer alongside OPEC, the Organization of Petroleum Exporting Countries.

2. The natural gas boom

America is now also the world's biggest natural-gas producer, with an increase of more than 30% in production since 2008. Former President Barack Obama's aggressive environmental agenda was made politically easier because plentiful supplies of cleaner burning gas enabled an affordable shift away from coal in the electric sector.

With exports of liquefied natural gas, the U.S. is also leading the way in stitching together a global natural gas market similar to the world's liquid oil market. Environmental concerns, including about fracking, an extraction technology that enables companies to reach new sources of oil and gas, have risen alongside economic gains of the oil and gas boom.

And yet the advances in fossil fuel production keep coming, which strengthens both our domestic energy independence, and our national security. As the Axios peice notes, the country has also seen a boom in wind and solar production, in no small part due to government mandates.

Mandates make for bad policy, with governments picking winners and losers, and using the force of law to do so. While we don't deny that many American workers have benefitted from such mandates, we are less sanguine about the long term stability of those sectors if the mandates and subsidies are removed.

The energy boom has also created losers in the space, including nuclear and coal. We remain big fans of nuclear energy (if one believes we need to take action against climate change, then nuclear is definitely the way to go). But we remain concerned about coal. Politicians jump of the coal bandwagon for obvious reasons -- it is the oldest and among the most abundant of domestic energy sources. The industry has also provided good jobs for many people for generations.

But American natural gas -- cheap, even more abundant, and much cleaner to burn -- is taking over coal's place in the energy portfolio. That's not to say coal will disappear -- far from it. But it is unlikely to reclaim the leading role in America's energy needs. 

The nation's energy entrepreneurs can be justifiably proud of the gains they've made, especially in the face of government indifference (or open hostility). There efforts are transforming the economy, and strengthening our security. So long as government stays out of their way, more gains, and more jobs, will follow.