In the energy marketplace, President Obama’s vision of an “all of the above” strategy is actually happening. Production of oil, gas and alternative energy is rising, even as demand begins falling for these energy sources — all thanks to new technology. The market forces driving these changes are so powerful that even politicians probably can’t screw them up.
The changes in the energy picture were summarized for me recently by Energy Secretary Ernest Moniz. He’s a former MIT physics professor who, with his curly, over-the-collar hair, looks very unlike the usual Cabinet secretary. I’d worry that Moniz was just blowing smoke, but he backed up his claims with extensive statistics.
Let’s start with oil production: According to a study released last month by the Energy Information Administration
(EIA), the country is on track to pump nearly 10 million barrels of oil a day by 2016 — roughly equal to Saudi Arabia’s output.
This forecast is much stronger than a year ago, thanks to rapid shale-oil development “as producers locate and target the sweet spots of ‘plays’ currently under development and find additional tight formations that can be developed with the latest technologies,” the EIA report notes. Oil production from shale reserves is forecast to increase from 2.3 million barrels a day in 2012 (or 35 percent of U.S. production) to 4.8 million barrels in 2021 (or 51 percent of the total).
Next, let’s look at natural gas, where production is expected to surge 56 percent between 2012 and 2040. Here again, the new factor is shale formations that can be unlocked by hydraulic fracturing, or “fracking,” of the rocks. This shale gas will soon account for about half of total U.S. gas production.
Environmentalists worry that fracking may contaminate groundwater. This issue is sharply debated, but what’s indisputable on the environmental front is that the flood of cheap gas is reducing U.S. use of coal — which, in turn, is sharply lowering emissions here of carbon dioxide, which scientists see as the cause of global climate change. The EIA study predicts U.S. emissions of carbon dioxide will remain below their 2005 level in every year through 2040.
This U.S. carbon reduction comes at a time when emissions are rising in Europe, Japan and other developed economies. By substituting lower-carbon fuels for coal, the United States has broken the usual link between rising gross domestic product and rising emissions. In the United States, emissions per dollar of GDP in 2040 are expected to be 56 percent below their 2005 level.
Meanwhile, technologists have found ways to capture carbon dioxide through coal gasification (converting coal into gas) and pump it into depleted oil wells, allowing recovery of trapped oil. This “enhanced oil recovery” is now adding about 300,000 barrels per day, but some analysts speculate it could rise to as much as 3 million daily barrels in a few years.
Alternative fuels? Wind farms and solar panels may be a laugh line for conservatives, but they shouldn’t be. Since 2008, U.S. wind-power capacity has more than tripled, and it is now generating the equivalent of about 60 large nuclear reactors. As for solar, photovoltaic panels are producing 10 times the power they did in 2008, with the cost down from $3.40 per watt to about 80 cents.
Do you see a light bulb going on here? Maybe it’s a “light-emitting diode,” or LED, bulb. These are 84 percent more efficient than the old incandescent bulbs that generated more heat than light, literally; the LED bulbs also last about 25 times longer.
It’s an almost ridiculously upbeat story. Thanks to rising domestic production and falling demand, U.S. dependence on foreign energy imports will fall to just 4 percent in 2040, compared with 30 percent in 2005. And we haven’t even talked about the strategic implications of this energy independence and reduced vulnerability to Middle East turmoil.
It’s hard to give up our view of energy as a national headache, but these startling forecasts suggest the energy future is, dare we say it, rather bright.
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