Meeting our energy needs

The United States is moving toward meeting all of its energy needs from domestic resources even faster than was predicted just a year ago.

The International Energy Agency (IEA) said last year that the U.S. would become the world’s largest oil producer, surpassing Saudi Arabia and Russia, by 2017. Its new World Energy Outlook moves that up to 2015. The U.S. is already the world’s top producer of natural gas, a position it reached in 2012 thanks to an expanding supply of shale gas. The IEA sees the United States holding both top spots at least until the early 2030s and being energy self-sufficient by 2035.

This huge shift didn’t happen by accident, and it will have implications for both the economy and the environment.

America’s energy future seemed headed down a different path not long ago. In 2005, U.S. oil imports reached record levels, prompting President Bush to declare that America was “addicted to oil.” In general, dependence on foreign supplies increases the impact of supply disruptions. Note, however that oil price is based on global demand and supply balances. And while U.S. production is growing, global demand (particularly from Asia) has risen at a greater rate, leading to higher prices for all global consumers.

Since 2006, the United States has taken action on two fronts to curb this dependence on foreign oil: reducing energy use and increasing domestic production.

New standards for cars and trucks are increasing fuel economy. Also, blending petroleum products with domestically produced biofuels – ethanol and biodiesel – is reducing the total quantity of oil required to fuel the U.S. economy. Meanwhile, social trends such as telework, people moving back to cities and using public transportation, as well as an aging population have led to people driving fewer miles and consuming less fuel.

On the domestic production front, technological advances in seismic imaging, horizontal drilling, and hydraulic fracturing have made it easier and cheaper to get oil and natural gas from smaller unconventional sources. These include non-porous sand (tight sands), coal seams (coal bed methane), and most recently from very fine grained sedimentary rock called shale.  Oil and natural gas are both obtained from tight sands and shale rock.

 As a result, the EIA recently reported that U.S. proved oil reserves are just shy of 150 billion barrels, a level not seen since 1985. The Potential Gas Committee reports that technically recoverable natural gas reserves are now at 2,384 trillion cubic feet, which is a nearly 100-year supply based on recent consumption rates.

This new domestic supply is expected to continue to benefit the U.S. economy. Importing less oil and natural gas improves the U.S. trade deficit. Cheap, abundant natural gas is helping to lower the cost of electricity, reducing expenses for everyone from individual homeowners to huge manufacturers. Numerous companies have cited natural gas supply and price in announcing plans to open new facilities in chemicals, plastics, steel, and other industries in the United States, including $41.6 billion worth of industrial investments that are planned between 2012 and 2018.

While the growing U.S. supply of oil and gas is good news for the U.S. economy, it’s a mixed bag for the environment. U.S. greenhouse gas emissions are back down to mid-1990s levels, in part because electricity generators are using more natural gas instead of coal, which emits twice as much carbon dioxide. However, there is evidence that low-cost natural gas is crowding out zero-emission nuclear power and renewable development, and this is not good news.

As we create a self-sufficient energy future, we need to include low- and zero-emission sources such as wind, solar and nuclear along with energy efficiency and carbon capture-and-storage technologies. We also need to ensure that new supplies of natural gas and oil are produced in the most environmentally sensitive way possible, including addressing methane leaks throughout the production, transmission, and distribution processes. That is the only way to achieve the steep cuts in heat-trapping gases in the long term to protect the climate.