The Case against US Energy Independence

Energy-related news at the close of 2012 was all about US energy independence, a goal of US presidents for decades.  It will not happen, and here is why. Global demand for energy along with relatively free markets will drive supplies of energy toward the area of growing demand.  That growing demand will put pressure on prices; the areas of growing demand will increasingly come from outside the United States.

But the case against US energy independence is not one against its value for our security and the benefits of uninterrupted supply so much as it is against the pragmatic reality of its likelihood in a global energy market.

Of course, increases in the supply of oil and natural gas, the growing availability of renewables, and improved efficiency in energy consumption have the capacity to mitigate the impact of increasing demand on price.  To the degree that an increasing supply of energy is able to offset demand for it, there is some possibility that the US may achieve its long sought after goal, but it remains unlikely.  Here is why.

US production of petroleum rose for the third consecutive year in 2012 to 8.7 million barrels a day, up from 7.5 million in 2010.  Net imports of petroleum have fallen by 29 percent over the same period (see Penley on Education and Energy: World Energy Outlook 2012).  Yet, the Department of Energy data on which this is based show that oil imports remain almost as high at 7.7 million barrels per day.  While there is still plenty of opportunity for oil-producing companies to find and produce more domestic oil, the difference between what the US consumes and what it produces is likely to still depend upon non-US supplies from major oil and gas companies that search for oil within and outside the US.

Moreover, the growing demand for energy in developing countries endures.  Right now readily available supplies of oil mean that prices have declined and remain steady.  None the less, the potential for increases in price and declines of reserves remains.  The Economist forecasts China’s growth in GDP per capita this year at a staggering 51% from US $6,890 to $10,410 (PPP).  With such tremendous growth anticipated in wages as well over the next three years, the potential for very increased demand for petroleum products is huge.  And the magnitude of the growth portends very significant increases in price without commensurate rises in available product.

US energy independence is not likely for reasons associated with the global, free market for energy and the rise in GDP from countries like China and India.  That market is a good thing for the US.  It has meant that we have been able to consume far more energy than we have produced domestically.  It means that we will be able to benefit in the future from our abundant natural gas supplies as global demand for energy grows and the US increases its exports of coal and natural gas.  Of course, all of this depends upon US and global political leadership that recognizes the value of healthy, profitable energy industry that is relatively unencumbered by restrictions on business.

Advances in Energy Research

The complex nature of our energy future was evident in a recent announcement by the National Energy Technology Laboratory (NETL).  NETL announced $4.4 million in new research funding for Solid Oxide Fuel Cell Research.  The two primary areas of research are electrochemical performance enhancement and improvements to the durability of cathode materials.  Said the NETL in its announcement of this research:

The SOFCs (solid oxide fuel cells) under development within SECA (Solid State Energy Conversion Alliance) are ideal for use in central generation applications, enabling efficient and economical systems for up to 99 percent carbon capture. They also emit practically no pollutants (nitrogen oxides and sulfur oxides) while consuming approximately one-third less water than other advanced power generation technologies. Power plants based on SECA fuel cells and coal gasifiers—units that turn solid coal into gaseous fuel—will generate power with overall efficiencies greater than 50 percent, compared to approximately 25 percent for traditional coal-fired power plants, including CO2 capture processes.

Renewables like wind and solar offer the advantage of a low carbon footprint when compared with traditional fossil fuels.  Among their disadvantages are relatively high costs when compared with traditional fossil sources of energy like oil and their intermittent availability.  That is why I have previously written about the importance of improved energy storage research (see Energy Storage: Advances in Research) if renewables are to gain much ground in our complex mix of energy sources.

Moreover, oil and coal remain readily available for the foreseeable future.  Our reliance on another fossil fuel, natural gas, is increasing rapidly with its widespread availability.  Its increased use is made possible through American technology that is making fracking safe and reliable.  With a lower carbon footprint and declining prices, natural gas is also increasingly becoming the fuel of choice for the generation of electricity used by those new electric vehicles.  But research like that supported by NETL could make coal a more acceptable source of energy as well.

The role of research is significant in not only how it advances our technology but in what it conveys about the complex energy map that we confront on the 21st century.  Having relied primarily in the 20th century on oil, coal and more traditional and ancient sources of energy, the 21st century is likely to appear very different at its close.  It will not, however, be a century of dramatic change.  Fossil fuels are just too inexpensive still and too widely available for that to change.  Moreover, developing countries are aggressively increasing their use of these valuable sources of energy.

While this century is already shaping up to be different from the last in our increased use of renewable energy sources, the mix of their use along with fossil fuels in the latter years of this century will fundamentally depend on the extent to which technology makes renewables cheaper, energy storage more reliable, and fossil fuels cleaner.  Research has already made natural gas the choice for a cleaner fuel from which to generate electricity.  It is likely as well to alter whether coal can be used without some of the atmospheric carbon and health-related aerosol issues that have been raised about it.  Much of our complex energy usage depends on our commitment to continued funding of sound research – by government and business.