Oil Price and Natural Gas

As recent headlines have documented, the US has seen a steady, modest decrease in oil prices since this spring. Heightened concerns about Europe’s economic outlook and the larger global recession have continued to constrain economic growth and with it, demand for oil. That has certainly caused prices to fall. But equally, domestic energy production has helped cut prices at the pump as well and help us simultaneously to wean our reliance on foreign suppliers. It is important we not let recent relief at the pump obscure our mission of securing other sources of energy, and natural gas seems to be one of the most readily available.

Despite calls by many earlier this year for the President to do something about prices, which were rising at the time, the President should not receive credit for the decline any more than he should have received blame for the increases earlier in the year. This spring I wrote that many factors affecting prices at the pump are beyond Washington’s control, and it remains the case today. But there are still a number of measures the President has at his disposal, most notably domestic energy production. We should be developing those resources on all fronts – including natural gas which is proving to be a cheap and clean alternative to oil.

And domestic production has been on the rise, but this progress comes largely in spite of the Administration’s policies, not because of them. As the global recession continues, the economic benefits of harnessing our resources are critical to long-term recovery. And they’re beginning to show. The latest trade figures indicate crude oil imports are down from last year; earlier this year the US became a net exporter for the first time since 1949; and energy booms across the country are rejuvenating local and state economies.

It is crucial today’s energy policies create a framework for tomorrow. The global recession, like the price of oil, will change. Eventually economic recovery will be accompanied by increased demand for oil, and prices will jump again. We need to start looking now for new alternative forms of energy while at the same time improving the efficiency of our current usage. It is important we avoid putting unnecessary barriers in the way of this development. There exists the potential for state and federal regulators to stifle natural gas development through unnecessary regulation.

As the price of oil rises in the future, the potential for natural gas as a substitute for oil will increase, as will the potential for renewables. As price rises for oil, alternative sources of energy will become more viable. Right now, the ready availability of cheaper oil has reduced the pressure for conversion to natural gas and for the development of cheaper renewable sources of energy. That will change.

We should not allow the current oil price decline and the greater comfort that we have in filling our cars’ tanks with cheaper gasoline to deter us from research on renewables. Nor should the decline in the price of oil give us a sense of false security about increased, unnecessary regulation associated with fracking. The very large shale beds of the U. S., China and elsewhere remain important future sources of energy. Times like these should not lead us to make mistakes that inhibit our increasing the supply of energy as demand returns.