June 10, 2012
America’s New Energy Reality
Daniel Yergin, the author of several excellent books on U.S. energy policy, wrote this interesting Op-Ed piece in Sunday’s New York Times about the revival in oil and gas production in the United States. In 2011, the U.S. achieved the largest increase in oil production of any country outside of OPEC. Thanks to the ability to extract oil from shale, North Dakota, with its Bakken Shale play, overtook California as the nation’s third largest oil-producing state. Yergin points out that with production increasing and oil demand declining in the U.S., we are “on the way to becoming ‘energy less dependent’,” with the goal of energy independence still elusive.
Apart from the analysis of energy security and balance of payments associated with energy independence, the “other story” concerns the broader impacts on the economy. According to President Obama’s 2012 State of the Union address, shale gas development created 600,000 new jobs as of 2010, spread widely across the nation. Just as important, the low energy costs resulting from the abundant supplies of natural gas have stimulated a revival of manufacturing in the U.S., particularly in the area of petrochemical companies, and increased the competitiveness of American industry.
Yergin’s conclusion pretty much captures it, and includes a nod to renewable energy and energy efficiency, as well as the need to minimize the environmental impacts of developing oil and gas resources:
“America’s new story for energy is still unfolding. It includes the continuing development and expansion of renewables and increased energy efficiency, both of which will be essential to our future energy mix. But what is striking is this great revival in oil and gas production in the United States, with wide impacts on jobs, economic development and the competitiveness of American industry. This new reality requires a new way of thinking and talking about America’s improving energy position and how to facilitate this growth in an environmentally sound way — recognizing the considerable benefits this will bring in an era of economic uncertainty.”