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The Energy Spectator
Energy to Spare
North America is abundant with energy sources and clean technology — all that’s missing is the political and cultural will to free ourselves from the Middle East.
With an Arab Fall if not Winter dominating the Middle East, the U.S. is under pressure to intervene even more. Unfortunately, reliance on imported oil continues to entangle Washington in the Middle East’s volatile politics. Some analysts advocate more subsidies for alternative energy in response. It would be better to free North America’s abundant natural resources, providing the U.S. with a brighter economic future.
Americans have endured multiple energy “crises” centered on the Mideast over the last four decades. Arab oil producers imposed an embargo during the Nixon administration, which had bizarrely discouraged domestic production with price controls. President Jimmy Carter created the Department of Energy, which paradoxically did more to discourage than promote energy development.
President Ronald Reagan eliminated oil price controls, but had to wait for Congress to remove natural gas restrictions. After the Iran-Iraq war threatened to disrupt oil shipments from the Gulf, Washington “reflagged” Kuwaiti oil tankers and provided American military protection for petroleum shipments. Succeeding administrations promoted subsidies for alternative energies and promised to reduce U.S. dependence on Mideast oil, with little practical result.
Today the Obama administration continues to back the embarrassing Gulf kleptocracies led by Saudi Arabia because they are major oil producers. Unhappy with this dependence, President Obama pushed even bigger subsidies for other energy sources. This corporate welfare wasted hundreds of millions of dollars on federal support for private companies such as bankrupt Solyndra.
Alternative energy production is up, but remains largely irrelevant to meeting Americans’ energy needs. “Their overall contribution to world supply remains de minimus and stays that way (even though it is still growing rapidly) in every credible future scenario,” explained Mark P. Mills, an Adjunct Fellow at the Manhattan Institute, in his recent study, “Unleashing the North American Energy Colossus: Hydrocarbons Can Fuel Growth and Prosperity.”
Coal, natural gas, and oil remain the least expensive and most convenient fuels. That’s why they supply more than 85 percent of energy today. There are technical alternatives to these energy sources, but no economic alternatives. While politicians and environmentalists continue to proclaim alternative fuels as a panacea, Mills explained that “The game-changing technologies that have emerged involve hydrocarbons: natural gas, oil, and coal.”
Nor is enforced conservation any solution. With the rise of China, India, and other emerging markets, the U.S. matters ever less in determining world energy prices. While three decades ago America accounted for roughly one-third of the world’s energy consumption, observed Mills: “Today, however, the U.S. has dropped to below 20 percent of world energy demand; and before three decades pass it will fall to under 15 percent. As a result, going forward, global markets and prices will be increasingly disconnected from domestic U.S. energy consumption behavior, whether virtuously voluntary or punitively policy-driven.”
Obviously, there is a technical limit to the world supply of hydrocarbons. However, contrary to common myth, the world is not running out of energy. Rather, advancing technologies now allow access to supplies once beyond reach. Explained Mills: “Technological progress in hydrocarbon exploration and development has been transformative and is ongoing, enabling the emergence of a new era of hydrocarbon production, which is, in turn, unleashing the capability to efficiently tap into North America’s enormous resources of natural gas, oil, and coal.”
Examples include improved materials and information technology, better ability to find and map supplies and extract resources, directional drilling, and the much discussed hydraulic fracturing. It isn’t just natural gas and oil. Noted Mills, new technologies have “also driven a near doubling in the coal sector’s productivity in the past two decades.”
Energy discoveries overseas have received significant public attention and will prove beneficial. However, there also is much good news closer to home. Mills explained that “Technology has unleashed staggering quantities of commercially exploitable reserves of these fuels, especially in the United States and its neighbors in North America.”
The U.S. once was viewed as a permanently declining energy producer. In 1978 the U.S. Congress even approved the Fuel Use Act, which limited consumption of natural gas, the supplies of which were constrained by federal price controls. This mentality of scarcity drove the Carter administration to launch its disastrous War on Energy, highlighted by pervasive regulations and massive subsidies. Unfortunately, this myopia continues to dominate Washington, as Mills detailed in another Manhattan Institute study, “Liberating the Energy Economy: What Washington Must Do.” He pointed out that today’s federal policies have “evolved unintentionally to become complex, overreaching, and often capricious.”
America no longer is energy poor. “The United States is now the fastest-growing producer of oil and natural gas in the world,” observed Mills in “Unleashing.” America is expected to pass Russia as an oil producer by 2020.
Americans could produce even more energy if the U.S. government freed up access to existing resources. The U.S. alone is estimated to possess 30 billion barrels of oil reserves based on current technology. Total resources are far greater and will yield even more recoverable supplies as technology advances.
Off-shore oil deposits add even more. Mills explained: “The technically easy-to-access — if not politically accessible — oil in Alaska’s off-limits ANWR and the Gulf of Mexico would, in the short term, essentially triple existing U.S. oil reserves.” New technologies have dramatically improved the ability to find and develop these resources.
Even more significant is shale oil. Reported Mills: “The Green River Formation, for example, a shale region largely beneath Colorado, Wyoming, and Utah, contains an estimated 2,000-3,000 billion barrels of oil,” of which between 30 and 60 percent is estimated to be recoverable with existing technology. Alberta, Canada’s oil sands are estimated to contain another 2,000 billion barrels of oil — which could come to the American market with the approval of the Keystone Pipeline project.
About the Author
Doug Bandow is a senior fellow at the Cato Institute. A former Special Assistant to President Ronald Reagan, he is the author and editor of several books, including The Politics of Plunder: Misgovernment in Washington (Transaction).
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Pecos Pete| 12.14.12 @ 8:05AM
"Freeing the energy industry would mean jobs, wages, sales, and tax revenues." Exactly what King O and the environmentalists do NOT want, except for tax revenues.
In due course the feds will formally nationalize the energy and mineral companies. The environmentalists would love to be the owners of these resources thus enabling their desire to eliminate them from the USA. Cave dwelling is a swell life.
Jack in Wi| 12.14.12 @ 8:31AM
This country is awash in energy. There is enough here for hundreds of years. It means the USA can get the hell out of the Middle East once and for all. Even now most of our energy comes from North America. The whole world is discovering new sources of hydrocarbons. Let the Saudi's eat sand. Gas should be no more then a dollar a gal. America was built on cheap enery and now it can be rebuit on the same thing. Energy produced here means jobs and money here.
TLP| 12.14.12 @ 2:16PM
When Jack is right? He's right.
Queery, Jack?
Could you be so kind as to elucidate WHY the Democrats fight, Tooth and Nail, to prevent us from being Energy Independent, all the while, bemoaning that we are Hostages to Middle East Oil?
FBX1999| 12.14.12 @ 3:11PM
This might be a bit tricky for our friend Jack, so I'll spell it out.
Its pretty hard to build a one-world oligarchy with a prosperous economy in existance. Energy independence would prevent Soros, Buffet, Gates and the rest from ruling us all, and they simply won't allow us access to cheap energy for that reason.
The Useful Green Idiots (UGI's) think they're Saving the Planet.
Occam's Tool| 12.18.12 @ 3:21PM
Finally, Jack shows some hostilty to Islamist Terror supporting scum. Yes, we should drill, baby, drill. North Dakotans deserve to get rich. Very nice people.
mike 3/505| 12.14.12 @ 8:49AM
"North America is abundant with energy sources and clean technology — all that’s missing is the political and cultural will to free ourselves from the Middle East."
Correction: all that's missing, is the political and cultural will to free ourselves from servitude of a feral government that has no business dictating how we use those resources in the first place. It's well past time that the several states boldly non-comply with Federal BS...especially BS that deigns CO2 and rainwater as pollutants.
Von Mises Jr| 12.14.12 @ 9:22AM
The "political will" to drill will occur when Obama's "kleptocracy" is complete. If you recall, Obama gave somewhere between $2B and perhaps $15B to PBR that Soros had invested in. He was willing to champion drilling when it was a money laundering operation. So if he can nationalize oil, we will drill like China does with CNOOC, Russia does with Gazprom, Lukoil, Rosneft and Transnet, and PBR does in Brazil. The stocks are listed as NaN or "Not a Number" when identifying stock holders.
The author is incorrect about the environmental reasoning and cause of crony capitalism such as Solyndra. If you take Hillsdale's "Constitution 201," the Professors explain how the new Progressivism is fascism. The paradigm shift occurred in 1965. The old Progressives moved leftward to Stalinist/Maoist tactics focusing with LBJ's "Great Society" on the three pillars of Civil Rights, Environmentalism and Education. Look where we have come to so far. Crony capitalism is a major feature of this socialist movement.
I would summarize the shift as the GOP becoming like the better intentioned Wilson and FDR style statist, and the Democrats adopting the platform of the totalitarian socialist.
Russel| 12.14.12 @ 10:45AM
Well put , Von . I may have some of that in my head , but sure can't put it on paper like you . What anyone is yet to nail down tho is : what is the ultimate goal of these socialist , liberal whacko's ?. They live in the greatest country ever made and enjoy its riches and rewards . Are they so stoopid as not to see what they're doing will take all that away ?. This isn't a hard question , but I've yet to hear an answer. Why do Reid and Pelosi take the tack they do ?. Reid is a crook and Pelosi half nuts , but they're both rich and live like royalty . Sign me dumbfounded .
Moe Blotz| 12.14.12 @ 11:29AM
Same reason Barry "choom me" Sotero/Obama wanted to be president: POWER.
Al Adab| 12.14.12 @ 11:33AM
Because Pelosi and Reid, while rich, are not the income producers who are subject to the Obama success penalty tax increase. That $250K tax rate only hurts those running businesses and making such income.
Of course the rates on capital gains and dividends goes up too along with all the other imposts that anyone working for wages will pay.
BTW, taxation without representation might be a cause when we realize that among others there is that $63 health care impost put in place by HHS regulators; never voted into place by our Congress.
Von Mises Jr| 12.14.12 @ 12:02PM
It is because they prefer serfdom where they have power in perpetuity while creating zero wealth. This is the driver that created the "Age of Democratic Revolutions" across Europe in 1760 to 1800. Tallies, quitrents, road taxes, oven taxes were imposed after the Industrial Revolution made serfdom obsolete and the Nobles worthless.
Just listen to Obama, Reid or Pelosi and it is abundantly clear that if they had to compete in the free market to earn a living, they would probably be homeless people. If you tried to present their arguments to a private sector boss of any value, you would be fired on the spot. So you co-opt the government and use the police power to steal what you could not earn.
TLP| 12.14.12 @ 2:20PM
And we all know how this inevitably turns out.
Somewhere, Santayanna is smiling.
Of course, he might be Crying, too.
JD| 12.15.12 @ 3:30PM
If you don't understand why they do what they do, then you're no better than them.
Their flaw is lack of understanding. They don't understand what makes America great. They don't know what their policies actually do. They think the rich used to pay a lot more taxes. They think the poor are worse off than before. They think unprecedented greed is causing the problems that their policies cause.
You must understand the truth, and you must understand what they have wrong. If you don't understand both of these things, then you are like they who base their positions on misunderstanding.
Louis Jenkins| 12.14.12 @ 9:01AM
Except, Except, wait for it, OBAMA , the Democrat party, and Tree Huggers. The only way for America to have more abundant energy is for the government to nationalize the industry. There seems to be a dis-interest for cheaper hydrocarbons. Taxing it is a different story. We all know that it is in the best interest of our economy, but let's be honest, it is all in politics. Get the politics out of it, and America would soar.
TLP| 12.14.12 @ 2:47PM
Contest at Tuesday's Story: More Pants Than Fire.
Look for Pinnochio.
MikeW| 12.14.12 @ 9:21AM
There are lots of good reasons to encourage use of home-grown hydrocarbons, but invoking the Middle East turmoil perpetuates the Gulf Myth; i.e. that the U.S. is totally dependent on Arab oil.
The U.S. imports 45% of its oil, and 22% of that comes from the Middle East. Do the math: less than 10% of our oil comes from that part of the world. Even if we reduce the percentage to zero, the problems of Arab infighting and anti-Israel hostility won't go away.
c. j. acworth| 12.14.12 @ 10:37AM
But we would have far more leeway in dealing with the problems of Arab infighting. As in, why do we care what they do to each other? They have shown themselves to be a bunch of savages who pine for the 7th century. Fine, let them have it. Just stand ready to jump on their necks with both feet if they try to export it. If any decide that they would like to join the League of Grown-Ups, let them ask politely and we'll talk.
Al Adab| 12.14.12 @ 11:37AM
The US is about to become ance again the worlds leading producer of oil Why then do we export, say to use round numbers, 100 tankers every day while we import 100 tankers everyday? Should not American oil remain in America and drive down the energy costs here before we export the surplus? Our military should not be dependent on imported oil (ask Japan how that worked) when action is required.
TLP| 12.14.12 @ 2:48PM
Exactly.
Sturmudgeon| 12.14.12 @ 4:58PM
Great post, c.j.
Thanks!
Vance P. Frickey| 12.14.12 @ 10:29AM
It's no longer a matter of political alignment whether you believe in global warming. I personally doubted the case for global warming based mostly on IPCC's history of academic fraud and naked political gamesmanship, but Princeton's Freeman Dyson has adopted the case for global warming after having been a skeptic for years (partly for the same reasons I mentioned).
Since the case for global warming being good enough finally to stand without help from academic fraud and political log-rolling, hydrocarbons can't be the sole foundation for an American economic recovery, nor can they be used without substantial repair of the damage they cause to the environment. Dyson proposes massive planting of rapidly-growing trees to trap the carbon dioxide which is the problem with hydrocarbons. That can also be used to help with soil erosion throughout the world and to create jobs and repair the damage that exploitation of federal lands for oil, gas and shale will inevitably cause.
We need to work on other forms of energy. Solyndra and other less well-publicized solar flops paid for by Federal loan guarantees demonstrated that solar doesn't have the power we need for our industry. Nor does wind. Nuclear is the only real power source potent enough to run our country that won't add to global warming. Great to know we have plenty of hydrocarbons, but we'll need them as industrial feedstocks, not power.
BShep| 12.14.12 @ 12:22PM
Let's see, how can I reply to this in a simple but clear manner?? Oh yeah, BULLSQUAT!
I may be able to accept global warming (hard to do when the average temperature has been going DOWN during the last decade) but I can never, ever accept man made global warming. That, my dear sir is BULLSQUAT, plain and simple.
Besides, global warming does not mean summers will be so hot that we are all going to die. It means that our winters will just be a little milder. Being a Michigan resident in December (go RTW) makes me wish for milder winters. After all, even the rabid MMGW believers are only predicting a 1 degree C average increase in the next hundred years (or whatever their current nonsense is).
Al Adab| 12.14.12 @ 2:56PM
Temperatures of today are roughly equivilent to those around the year 1000AD when the vikings were farming Greenland; during the time of King John when wine grapes grew in England and to about 1350 when the "little ice age" set in. That lasted to about 1815 when temps began to rise again.
Nuclear for electric production is essential. The Navy has been running those things for over fifty years now without incident. Hydro works and does not pollute. Leaves lots of oil to make gasoline cheap if we quit importing and use our own supplies. A few new refineries would make a lot of difference and create jobs both during and after construction.
Sturmudgeon| 12.14.12 @ 5:09PM
Good points and thoughts, Al... Thanks for the Common Sense.
Petronius| 12.14.12 @ 10:43AM
Banish the EcoCommies and drill.
Moe Blotz| 12.14.12 @ 11:41AM
Perhaps I will suggest to my elected representative to Congress and my Senators that we utilise the energy lying dormant in all the welfare recipients the administration has created. Before doling out millions of dollars in food stamps and welfare benefits, make the able bodied walk or run five hours per week on treadmills set up all around the country. Hook the treadmills to a generator and feed the juice to a central location ,then feed it to the electric grid. Think of the power 20 to 40 million bodies could generate every week. That might also reduce obesity among the government dependents as well. Now if we could just get our president to rescind his executive order that lifted the work requirement...................
Sturmudgeon| 12.14.12 @ 5:03PM
good one, Moe... but there would have to be TV monitors in front of the treadmills to act as the "carrot".
Who Knows?| 12.14.12 @ 1:12PM
If you want the full story, read “The Bottomless Well---The twilight of fuel, and why we will never run out of energy”, by Peter W. Huber & Mark P. Mills, 2005.
Yes, the same Mr. Mills.
Ah, the damage done by the pubic school systems in America are oh so far reaching!
There have always been “gaps” between X and Y.
The missile gap, the CEO gap (men verses women), the wage gap, the computer use gap, etc, but the knowledge gap is killing us. That, and the gap between people with closed minds, deeply programmed by the leftist schools, and those with at least the possibility to hear and process new information---deadly.
While we are presently going through the War of the takers verses the makers, led by Obama’s gang, I expect the gap to even widen---that is, the absolute number of real makers will likely stay about the same, while the takers grow; after all, pubic schools (including post high school education) continue to spit out programmed babies.
So, if now, in 2012, in America there are X makers and Y takers, in a generation there should still be X makers, but maybe 2Y takers.
Power to the elite makers!
JP| 12.14.12 @ 2:41PM
The political will to drill for shale and to frack on public lands will come as soon as enough Americans suffer through daily or weekly blackouts. Nothing like $1000/month electricity payments to get the voters to actually pay attention.
Coming in 5 weeks: the EPA will present the findings of its 3 year study of regulating fracting on private lands. This study will become law once the President approves it and signs the Executive Order.
JD| 12.15.12 @ 3:36PM
Many a conservative has made predictions like this one, and all have been wrong for one simple reason: they underestimate the Leftists' ability to lie about the causes of and solutions to problems.
The Leftists and their media will never let people believe that the solutions to resource issues are conservative ideas. That means people will never clamor for an end to Leftism.
sdfhlk | 12.14.12 @ 9:09PM
merry christmas to u,thank you so much.
jbspry| 12.16.12 @ 12:51AM
I would certainly support full-on development of American energy resources but with this caveat: that domestic resources be reserved for domestic markets alone. To allow our oil, gas and coal to be sold on the world market would enrich the oil companies but be counter-productive to the goal of national energy independence; we would simply be another Venezuela or Saudi Arabia.