7/9/2013 8:45 PM ET|
America's energy future is looking independent
We're not free yet -- and getting there won't come without some pain and many problems. But if done right, the payoff will be sweet.
We've come a long way since the oil shock of 1973, when Arab countries raised the price of oil while cutting production -- throwing the U.S. into crisis.
Now, the American energy story is completely different. Our oil imports are tumbling, and consumption is down. Part of that is due to the struggling economy, but also because our cars are extremely fuel-efficient, and more of them skip gas altogether. Plus, we now produce more of our own energy, moving the country from oil junkie to oil exporter.
If the Middle East decided to cut us off again, we'd still feel the sting. But it wouldn't be nearly as devastating as it was three decades ago. The U.S. is now the fastest-growing oil and natural gas producer in the world.
Our new energy boom is destroying the notion of "peak oil" -- the idea that the world's oil production is headed downhill from here. And it's leading many to wonder if the U.S. is approaching the long-sought goal of energy independence. Could we finally take care of ourselves?
Still a net importer
Before we go down this road, let's look at the current energy picture. The U.S. still imports a lot of petroleum -- about 10.6 million barrels a day last year from some 80 countries. Those imports made up about 40% of the petroleum used in the U.S. (Petroleum includes crude oil, gasoline and such biofuels as ethanol and biodiesel.)
But the situation is changing fast. Those net imports are declining sharply, and last year were the lowest since 1991. Domestic oil production surpassed 7 million barrels a day in February for the first time in two decades. Deepwater drilling in the Gulf of Mexico has rebounded after 2010's deadly Deepwater Horizon oil rig explosion.
Now, the U.S. is on track to produce more crude oil than it imports by next year, according to the U.S. Energy Information Administration.
This is a big deal. And it's creating ripple effects across the country, adding hundreds of thousands of jobs and boosting our gross domestic output. It has the potential to shake up global oil markets, rattling the oil cartel known as OPEC.
But the U.S. is making some huge trade-offs on the road to energy independence. Some worry that the new energy boom is causing significant and long-lasting damage to the land. People on both sides of the aisle are deeply opinionated, leading to intense political divides in Congress.
To understand what's happening, look no farther than Pennsylvania, one of the states that, along with North Dakota, is at ground zero of America's new energy boom.
About 60% of Pennsylvania rests on the Marcellus Shale, a vast sprawl of sedimentary rock that holds enormous amounts of untapped natural gas. It may be the second-largest natural gas find in the world -- and it was mostly off-limits to energy companies because it was too difficult and too expensive to get at.
The advanced technologies that make "fracking" possible changed all that. This high-volume hydraulic fracturing starts by drilling deep down into the ground, then turning the drill 90 degrees and fanning outward horizontally. It's a pretty ingenious way of getting at shale formations that are hundreds of millions of years old.
A mixture of water, sand and chemicals is forced into the ground, shattering the shale rock and drawing out precious oil and natural gas. Some water comes back up, too, but it's incredibly toxic at this point, carrying chemicals, acids, heavy metals and other material that's poisonous to humans and wildlife.
The good news: Fracking the richness of the Marcellus Shale has turned Pennsylvania's economy around. Pittsburgh is a global destination now for oil companies, and its population is growing for the first time since the 1940s. Shale gas has boosted Pennsylvania's economy by about $7 billion, and that could double by 2015, according to research firm IHS.
The bad news: Stories abound about how fracking has ruined lives in Pennsylvania. Well water became contaminated and corrosive. Animals lost their hair and died. Fish were poisoned. Arsenic and carcinogens have been found in the soil.
State officials and energy companies say they've cleaned up the messes left behind, and that in some ways the experience in Pennsylvania is shaping new fracking policies with a greater focus on the environmental impact. "Before our eyes, the U.S. is moving toward dramatically more energy independence," wrote former Pennsylvania Gov. Ed Rendell in a broad defense of fracking in The New York Daily News earlier this year.
The 'new Middle East'
The U.S. isn't alone in this boom. Canadian production is on the rise, and Mexican production is making a comeback. In fact, North America as a whole may produce 27 million barrels of oil, natural gas and other fuels per day by 2020, according to Citi analysts, up from around 15 million in 2010.
The result? What happens in other oil-producing countries will become less important to the U.S. and the rest of the world. In fact, we could see a new dawn of global stability, the likes of which we have never seen before, according to Citi. "North America is becoming the new Middle East," the analysts said.
But let's be real: This won't happen easily, mainly because of the politics at work. Environmentalists are already having fits about the consequences of fracking. How much oil and gas can we shake out of the land before an environmental disaster occurs? Clean-energy advocates worry that the new focus on oil and gas leaves little room for solar and wind development. And getting crude oil and natural gas from new production sites in North America to refiners and end users means new pipelines through someone's backyard or moving energy resources by rail, with the built-in hazards Canada is learning first-hand in Lac-Megantic, Quebec.
And yet the reasons to push forward are just as compelling. The U.S. economy, which has struggled for so long, could see more than 3 million new energy jobs by 2020, according to the Citi report. Imagine what it would do for our economic stability and national security -- not to mention foreign policy -- to be less reliant on other countries for oil and gas.
A new world unfolds
So much of this boom is still unclear. We have no clue about the long-term environmental consequences of fracking. We don't know how the Middle East will react as its vise-like grip over the world's energy supply is loosened. We don't know how U.S. lawmakers will handle the country's newfound power -- and Congress' inability to agree on anything lately doesn't inspire much confidence here.
Meanwhile, Americans continue to explore other means of energy production. They're getting off the grid with solar, although it's still very expensive to do so. Wind energy is also seeing new momentum. Only nuclear power, it seems, has been left behind in the shadow of shale gas.
Dare we hope for energy independence? Could all of these trends -- a burst of oil and gas production, falling consumption and more renewable energy -- come together in a revolution unlike anything in recent history?
The path is there, but it's rocky. It requires flexibility and cooperation from Democrats and Republicans, from the energy industry, from environmental advocates and from business leaders. And it will take years, even decades, to get there -- although the intense industry focus on fracking could speed that along.
Where we go from here is anyone's guess, but one thing is clear: The energy boom has opened up countless possibilities that could forever change the U.S. and the rest of the world. Our new energy story has just begun.
This article is part of MSN Money's special report on energy independence in America. Read the full series here:
- Can America frack its way to energy independence?
- Deepwater drilling reborn in the Gulf of Mexico
- Want to get off the grid? It'll cost you
- Nuclear power faces uncertain future
- Alt-fuel cars hit America's on-ramp
- 10 weird renewable energy sources
- Alternative energy keeps flowing in a cheap-fuel world
- 13 energy stocks ready to roll
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This article seems to downplay the role consumers can play by reducing our oil usage. More fuel efficient cars and electric vehicles can help us meet the goal. Electric is much cheaper than gas, and rates are much more stable since its produced from such a diverse mix of resources.
It also downplays the fact that energy independent or not, global supply and demand will determine future prices for easily exportable energy like nat gas and oil. That likely means stable to higher prices for as far as the eye can see as global demand trends up. After all, little (if any) of current oil production needs a price of $90+ a barrel to be profitable. The fact is $90 plus is what it takes to discourage enough demand to constrain it to the current supply.
"Some water comes back up, too, but it's incredibly toxic at this point, carrying chemicals, acids, heavy metals and other material that's poisonous to humans and wildlife"
Your statement about the toxicity of produced water is an overstatement. Water and oxygen are chemicals ,vinegar is an acid, iron is a heavy metal, and other materials are everywhere; but none are particularly poisonous to humans or wildlife.
At some point we must realize we can't keep putting up hundreds of 50 story (500 ft.) wind turbines in our most scenic areas. Folks that own homes near these noisy, flashing twirling monsters are sort of going to resent not being compensated for their loss of property values.
Time to recheck those numbers. They aren't green and only the goldman Sacs of the world are profiting.
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