Three years ago, I wrote about the "drill here, drill now" frenzy that had taken over the presidential campaign at that time. I called my post "
Drill Where? Drill When? Drill Why?". The crux of it was that U.S. oil consumption is so high, and U.S. oil reserves are so low, that no matter how much we pull from the ground domestically, we will never make a big dent in pump prices.
I was right. Sorry. Really -- it would have been great to have been proven wrong on this one.
In the past few years, there have been dramatic improvements to hydraulic fracturing ("fracking") and other extraction technologies. There has been dramatic new investment in leveraging those technologies. Domestic production has increased much faster than I ever imagined it could: we have
gone from importing two thirds of our oil to half (
source: Energy Information Administration, by way of NPR).
And then there is the graph of U.S. gas prices since the time of my last post (
source: GasBuddy.com). You'll see a big crash coinciding with the 2008 financial crisis. Then there's been a steady rise; prices now are about the same as they were before the crash.
One big issue is that different fossil fuels do not substitute well. So there is quite a boom in natural gas production out of the shales deposits of Pennsylvania right now (the "Marcellus shale") and this is great when gas can be used, but:
ReplyDelete- any required conversion isn't immediate
- gas can't be used in cars or planes
So the most important effect of these new reserves of gas (or these old but newly producible reserves, rather) is to decrease the importation of liquid natural gas (LNG) from other countries. That's nothing to sneeze at, although it comes at a price in terms of environmental disturbance due to the fracking byproducts. But it doesn't help with transportation, and conversion of coal- or oil-fired power plants to natural gas is a decade-long proposition.
Which leaves us with the same strategy as before, which is to combine all approaches, not provilege one over the other: increase recovery rates, find new reserves, conserve, improve fuel efficiency, explore and develop renewables, use cogeneration... and the usual controversial point, which is that nuclear power has a role too, at least in this century.
What you say makes sense, Claude. What that emphasizes to me is the importance of transparent markets; there's no way policy makers will pick a winner in such a complex and uncertain environment. Unfortunately, there doesn't seem to be much chance of that. Oil, coal, and gas producers get land and mineral rights for a fraction of market value. Renewable producers receive huge tax subsidies. And the costs of the environmental and health effects are consistently socialized.
ReplyDeleteRe: nuclear, it still has the best safety record per unit of energy produced, and it produces far less waste than burning fossil fuels. Bring it on.
Re: natural gas in cars, I still feel the way I felt back in 2009: http://cathedralofthebizarre.blogspot.com/2009/03/zoom-zoom.html. We will power our vehicles with many fuels, and the enabler will be the electric power train.