This past week has produced more political discussion of America’s capacity to achieve what has seemed very challenging – energy independence. Mr. Romney, like so many presidential candidates before him, has declared a goal for America of energy independence. And like so many others in the past, this achievement might have seemed doubtful and unrealistic.
But times are different. And those differences are evident in the earlier report from Citi GPS – Energy 2020: North America the New Middle East?. US oil output is up 23% over four years ago, and the U. S. has become a net exporter of petroleum products. Oil production alone is up 7% since the end of 2010. The Citi GPS report forecasts that current US trends in oil production will lead to a rise from 7.3 million barrels of oil per day in 2009 to 15.6 by 2020, based upon an evident trend in the 9 million for 2011. Technology developments and higher prices have driven the change in supply.
Already, we are seeing some change to the Obama administration’s regulatory permitting that has previously limited growth in off-shore sources. With continued progress on permitting and licensing available retained earnings of large oil companies will drive renewed investment. This, too, will add to the oil supply from US sources and contribute to the likely forecast for 2015 and later. Some forecast that Mr. Obama may become only the third president in US history to have seen an increase in the domestic oil supply during his presidency.
But it has been the startling shift in availability of natural gas that has mattered so much to the likelihood that Mr. Romney will be correct about the US future of oil independence. With new technology, including fracking technology and horizontal drilling, the growth in natural gas is also supportive of Mr. Romney’s plan, and its known, potential growth is even greater. The same report already mentioned forecasts that natural gas supply from the lower 48 states could grow by 22 – 29% by 2020, based upon current growth trends. It is fracking from shale beds that have provided this capacity.
Risks to our capacity to continue to increase the availability of US natural gas are primarily bound up in regulatory policy. From federal sources, we have still seen only limited regulation that would tend to stifle our capacity to increase the supply of natural gas from fracking. Nevertheless, new rules are under consideration, and I have written about the EPA’s related, questionable research in a previous blog – see The EPA and Good Science? State policy as well has the potential to limit supply in unpredictable ways.
New discussion of energy independence is a good thing, and the very good news in it is that our future seems very bright whichever candidate becomes our next president – so long as regulation does not unnecessarily stifle the growth in the supply of oil and natural gas.