In the times today an uplifting article about Americans becoming self sufficient in energy supply. This is how capitalism should work
The US will be energy self-sufficient by 2030, freeing itself from the clutches of Opec
A new year greets us with news of another recession but the good news is that gas bills are beginning to fall. Like medieval barons, the grudging utilities toss us a few scraps from their table but politicians issue pompous warnings that the age of cheap fuel is over; it is our moral duty, we are told, to get used to the £100 fill-up at the service station and electricity generated by expensive whirligigs in the North Sea.
Should we believe them? Should we lower the thermostat and buy an extra pullover? Thankfully, no. Affordable energy is possible and America is showing us the way.
America is back gas guzzling, oil drilling, cigar chomping and burning rubber down eight-lane highways in a high-speed hydrocarbon orgy. While we fret about Russian gas prices and the effect of biofuels on food prices, the politics of energy has been transformed. Within two decades North America will be self-sufficient in energy. A treasured prize, coveted by two presidents called Bush and derided as a fantasy of gun-toting paranoid Texan Republicans, is becoming reality. Thanks to huge investment in new technology, North America’s energy deficit will turn to surplus by 2030, according to BP.
In its Energy Outlook to 2030, the company’s chief economist, Christoph Ruhl, offers a vision of a surprisingly benign future in which there is ample affordable energy, provided by new sources of hydrocarbons, chiefly natural gas and a worldwide fall in energy intensity. Put simply this means that each dollar of new wealth is generated with less crude oil. It’s about efficiency, innovation and science, driven not by government diktat but market forces. It’s about exploiting vast reserves of shale gas, shale oil and oil sands in North America. It’s about coal seam gas in Australia and the UK and soon it will be about underground coal gasification and biodiesels made from bioengineered yeast.
If you don’t believe it, look at the US wholesale natural gas price, which has collapsed due to abundant supplies of shale gas. It is currently about $2.50 per unit, less than a third of the equivalent wholesale price in Britain. US oil prices too are depressed; an oil boom in North Dakota is turning local farmers into J. R. Ewings. Exploitation of Canadian oil sands is bringing a tide of oil into the Midwest. So much oil is flowing into the tanks in Cushing, an oil refining centre in Oklahoma, that efforts are under way to to pipe the new supplies south to terminals and refineries at the Gulf of Mexico.
Market forces have unleashed an abundance of new energy. No one should be surprised; it happened in the early 1970s with the discovery of new oilfields in the North Sea when the strange Meccano-like platforms at Brent and Forties and the vast reserves at Prudhoe Bay, Alaska, saved the West from strangulation by Opec.
Innovation, private capital and the free market have again confounded the doubters and upset the balance of power between energy suppliers and the consuming nations; as more US and Canadian crude stokes US refineries it means less dependence on unstable nations, such as Saudi Arabia, Nigeria and Venezuela. A clutch of big companies have applied to the US Government for licences to export liquefied natural gas. Only a few years ago America was frantically building receiving terminals for LNG. One was built by ExxonMobil to bring gas from Qatar to the US. Last week, reports suggested that plans are afoot to turn it into an export terminal to ship US gas to India.
The American energy renaissance is the biggest upset to global energy markets this century. The repercussions will be huge and beneficial. It’s not just the economic benefit. If you wonder why Washington appears so confident in seeking to enforce a blockade on Iran, it is not just military swagger or confidence engendered by the Arab Spring. It is about energy flows and the growing feeling that the tide may be finally beginning to turn against Opec.
If the Americas (including Brazil, with its vast offshore oilfields) are winners, who is less well-placed?
Europe remains a net energy importer but one with a new potential alternative to dependence on Russian gas supplies. Insecurity will increase in Asia, where China and India will become ever more dependent on the Gulf states and Iran for fuel. And Russia must abandon its hope of becoming a supplier of gas to the US and come to terms with its troublesome neighbour; China.
Who would have bet on such an outlook five years ago when the demise of US power was assumed to be the inverse correlation to China’s success? I believe no such assumption is necessary. Energy consumption is essential to economic expansion. While others played with antique solutions, such as windmills, North America looked to market-led innovation. The solutions are only now just emerging; they will come thick and fast.
The US will be energy self-sufficient by 2030, freeing itself from the clutches of Opec
A new year greets us with news of another recession but the good news is that gas bills are beginning to fall. Like medieval barons, the grudging utilities toss us a few scraps from their table but politicians issue pompous warnings that the age of cheap fuel is over; it is our moral duty, we are told, to get used to the £100 fill-up at the service station and electricity generated by expensive whirligigs in the North Sea.
Should we believe them? Should we lower the thermostat and buy an extra pullover? Thankfully, no. Affordable energy is possible and America is showing us the way.
America is back gas guzzling, oil drilling, cigar chomping and burning rubber down eight-lane highways in a high-speed hydrocarbon orgy. While we fret about Russian gas prices and the effect of biofuels on food prices, the politics of energy has been transformed. Within two decades North America will be self-sufficient in energy. A treasured prize, coveted by two presidents called Bush and derided as a fantasy of gun-toting paranoid Texan Republicans, is becoming reality. Thanks to huge investment in new technology, North America’s energy deficit will turn to surplus by 2030, according to BP.
In its Energy Outlook to 2030, the company’s chief economist, Christoph Ruhl, offers a vision of a surprisingly benign future in which there is ample affordable energy, provided by new sources of hydrocarbons, chiefly natural gas and a worldwide fall in energy intensity. Put simply this means that each dollar of new wealth is generated with less crude oil. It’s about efficiency, innovation and science, driven not by government diktat but market forces. It’s about exploiting vast reserves of shale gas, shale oil and oil sands in North America. It’s about coal seam gas in Australia and the UK and soon it will be about underground coal gasification and biodiesels made from bioengineered yeast.
If you don’t believe it, look at the US wholesale natural gas price, which has collapsed due to abundant supplies of shale gas. It is currently about $2.50 per unit, less than a third of the equivalent wholesale price in Britain. US oil prices too are depressed; an oil boom in North Dakota is turning local farmers into J. R. Ewings. Exploitation of Canadian oil sands is bringing a tide of oil into the Midwest. So much oil is flowing into the tanks in Cushing, an oil refining centre in Oklahoma, that efforts are under way to to pipe the new supplies south to terminals and refineries at the Gulf of Mexico.
Market forces have unleashed an abundance of new energy. No one should be surprised; it happened in the early 1970s with the discovery of new oilfields in the North Sea when the strange Meccano-like platforms at Brent and Forties and the vast reserves at Prudhoe Bay, Alaska, saved the West from strangulation by Opec.
Innovation, private capital and the free market have again confounded the doubters and upset the balance of power between energy suppliers and the consuming nations; as more US and Canadian crude stokes US refineries it means less dependence on unstable nations, such as Saudi Arabia, Nigeria and Venezuela. A clutch of big companies have applied to the US Government for licences to export liquefied natural gas. Only a few years ago America was frantically building receiving terminals for LNG. One was built by ExxonMobil to bring gas from Qatar to the US. Last week, reports suggested that plans are afoot to turn it into an export terminal to ship US gas to India.
The American energy renaissance is the biggest upset to global energy markets this century. The repercussions will be huge and beneficial. It’s not just the economic benefit. If you wonder why Washington appears so confident in seeking to enforce a blockade on Iran, it is not just military swagger or confidence engendered by the Arab Spring. It is about energy flows and the growing feeling that the tide may be finally beginning to turn against Opec.
If the Americas (including Brazil, with its vast offshore oilfields) are winners, who is less well-placed?
Europe remains a net energy importer but one with a new potential alternative to dependence on Russian gas supplies. Insecurity will increase in Asia, where China and India will become ever more dependent on the Gulf states and Iran for fuel. And Russia must abandon its hope of becoming a supplier of gas to the US and come to terms with its troublesome neighbour; China.
Who would have bet on such an outlook five years ago when the demise of US power was assumed to be the inverse correlation to China’s success? I believe no such assumption is necessary. Energy consumption is essential to economic expansion. While others played with antique solutions, such as windmills, North America looked to market-led innovation. The solutions are only now just emerging; they will come thick and fast.
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