BY: Parry Elliott
One
of the main challenges of the 21st century facing nations worldwide
is how to adequately and economically meet current and future energy
demands. This is particularly imperative for a country like the
United States, which according to the Energy Information
Administration, consumes on average 20.5 million barrels of oil a
day, making it the largest consumer of oil in the world. As a result
the US has essentially been at the mercy of OPEC amongst whose
responsibilities it is to set the global price of oil. However, in
the past decade, oil and natural gas markets have become highly
volatile with prices soaring to unknown heights one day only to
dramatically plummet the next. Apart from energy, the derivatives of
oil and natural gas are integral to a host of other industries and
applications including steel and paper production and use as key raw
materials in the chemical industry. The advent of hydraulic
fracturing, commonly known as fracking, provides a novel method for
tapping vast wells of natural gas from previously inaccessible shale
deposits.
Recent
technological advancements have fueled increased exploration for
shale gas, natural gas trapped within shale formations, with some of
the largest reserves being found in the Maine, California and
Pennsylvania. This means that cost to production and cost of natural
gas becomes significantly cheaper in relation to importing expensive
oil. Consequently, higher revenues can be obtained which can then be
funneled or invested into the development of more efficient
technologies and practices for exploration and refinement.
Companies
in the United States have been cognizant of these developments and in
an effort to remain competitive in the market have been, according to
Blackrock, increasing the amount of total capital expenditure they
feed into the energy sector. Accompanying this trend has been
increased US crude oil and liquid natural gas production and for the
first time in about a decade, US imports of crude oil have begun to
show a steady decline which when coupled with increased trade exports
leads to trade surpluses.
Other
benefits are also accrued in the scope of the broader economy. As the
US energy supply increases, the prices that consumers pay in the long
run conversely decrease. This in turn promotes a drop in the
inflation index and the energy expenditure of the United States. One
of the most promising or exciting advantages of increased domestic
energy production is the simultaneous increase in need for jobs from
a wide variety of backgrounds, i.e. from blue collar straight up to
advanced technical. Growth and expansion of industries, aside from
the energy industry, such as transportation, construction, builders,
mining, consumer durables and middle income retail are also observed.
With a 7.2% unemployment rate in the United States, it is clear that
shale gas exploration can be part of the solution to alleviating some
of the current job market woes. Ultimately, most important is the
increased energy independence of the US which can have implications
on a much broader geopolitical scale.
America's future lies in renewable energy. We as a country are too dependent on oil from foreign sources as well as our own supply. The environment is suffering from the fossil fuel practices. There is no such thing as clean coal, all coal puts out huge levels of CO2. If change is not enacted the increase in frequency and strength of storms will become even more apparent. Natural gas is a cleaner burn than other fossil fuels but wind, solar, and hydroelectricity are zero carbon emissions sources of electricity. America could divert its resources to sustainability but the cheap energy bubble would burst with our ego bubble. There are measures that need to be taken soon to avoid anymore irreparable damage to our ecosystems and we need to be bold enough to take them instead of allowing the next generation to deal with solvable problems.
ReplyDeleteNatural gas needs to be recycled so that we will not run out of them in the future. I do understand that they are not good in the air but at the same time we need them for a lot of things. The next generation may come up with something that they will not need natural gas.
ReplyDeleteIm glad that america is finally starting to realize that we need to come up with a way to come up way to cut out trading with the enemy. I like the idea of switching to natural gas. Just like the guy from BP said... Its cleaner, cheaper, abundant and it belongs to us. Why outsource when we dont have to?
ReplyDeleteThis is interesting because I have read on a article that Americans are becoming less independent of foreign oil. New technologies and the Canada shale oil has made this observation into a reality. The article states by 2025, Americans should be free from foreign oil and will only have to import it from Canada. Oil production is at a all time high domestically, and we are even selling some. However; I do think we should switch to natural gas and electricity because it is the safest and cleanest for the environment. Great article.
ReplyDelete