Fuel to Burn: Now What?
By JAD MOUAWAD
Published: April 10, 2012
THE reversal of fortune in America’s energy supplies in recent years
holds the promise of abundant and cheaper fuel, and it could have
profound effects on what people drive, domestic manufacturing and
America’s foreign policy.
Cheaper fuel produced domestically could reduce the cost of shipping and
manufacturing, trim heating and cooling bills, improve the auto market
and provide tens of thousands of new jobs.
It might also pose new environmental challenges, both predictable and
unforeseen, by damping enthusiasm for clean forms of energy and
derailing efforts to wean the nation from its wasteful energy habits.
But for Americans battered by rising gasoline
prices, frustrated by the dependence on foreign oil, skeptical of the
benefits or practicality of renewable fuels and afraid of nuclear power,
the appeal of plentiful domestic oil and gas could far outweigh the
costs.
Just a few years ago, the dominant theme in discussions about energy was
of declining production and the fear of running out of oil. Even today,
political tensions in the Middle East, particularly in the Persian
Gulf, have fanned fears of supply disruptions that are keeping prices
high.
But a new boom in energy production in recent years has upended these
expectations in record time. High energy prices led to a wave of
successful oil and gas exploration in North America, including in fields
that were deemed uneconomical only a few years ago. Using techniques
like horizontal drilling and hydraulic fracturing, oil companies are
tapping into deeply buried reserves in shale rocks and in the ocean’s
depths.
The surge in energy prices, along with a recession
and new government rules that tightened fuel-economy standards, led to a
sharp cutback in gasoline consumption. This decline in demand in the
last five years reversed decades of almost uninterrupted growth that
made the United States the world’s top energy consumer, accounting for
one in every four barrels of oil burned around the globe.
The North American energy revival is primarily the result of so-called
unconventional sources of energy — like shale oil and shale gas across
the United States, oil sands
in Canada and deepwater production in the Gulf of Mexico. In the last
five years, the United States and Canada combined have become the
fastest-growing sources of new oil supplies around the world, overtaking
producers like Russia and Saudi Arabia.
“The transformation unfolding in North America represents a potentially
decisive shift in the history of energy,” Rex W. Tillerson, the chairman
and chief executive of Exxon Mobil, who is not usually given to
hyperbole, said in a speech in Houston last month.
Ed Morse, head of global commodity research at Citigroup and a longtime
energy analyst, says North America has the potential to become a “new
Middle East.”
“The reduced vulnerability of North America — and the world market — to
oil price spikes also has deep consequences geopolitically, including
the reduced strategic importance to the U.S. of changes in oil- and natural gas-producing
countries worldwide,” Mr. Morse said in a recent 92-page report called
Energy 2020. ”Pressures towards isolationism in the U.S. will likely
grow, with consequences for global stability that can only just begin to
become understood.”
“The only thing that could stop this is politics — environmentalists
getting the upper hand over supply in the U.S., for instance,” the
report said.
The new supplies ensure that the United States will remain well
entrenched in oil, but the continuing reliance on fossil fuels also
carries significant environmental concerns — whether from the risk of offshore drilling,
or the hazards, many still unknown, of hydraulic fracturing. It also
means that greenhouse gas emissions will most likely increase, at least
until carbon emissions are capped or new technology to store carbon
dioxide underground is developed.
The glut of natural gas supplies cuts two ways on emissions. It has
effectively put an end in the United States to any new investment in coal
plants, which produce much more emissions. But it also makes the
economics of alternative, noncarbon energy sources like wind power or solar power difficult to justify without public support and subsidies.
Regardless of the environmental impact, there is no guarantee that new
supplies will inevitably lead to lower gasoline prices, as proponents of
unfettered domestic drilling argue. Oil is a global commodity with a
price set on the global market. With rising demand around the world,
particularly in emerging economies, and instability in many
oil-producing countries, many analysts predict global oil prices will
remain volatile — and high — for many years to come.
And with gasoline prices above $4 a gallon, the nation’s energy
resources remain a polarizing topic, pitting Republicans against
Democrats, environmentalists against oil companies, and conservationists
against advocates of unfettered drilling.
My Comments: With the current recession that is occurring gasoline is becoming a very difficult product to "deal with". People need gasoline to fuel their houses and their cars. It has also become extremely difficult to find a replacement for this product because most other known fuel sources require gasoline in some form. For example, electric cars need to be charged. Plugging in your car though to "charge" also requires gasoline as well as ethanol, the corn needs to be produced with some form of a gasoline run tractor and delivered in some form of delivery truck. Especially with the upcoming election, it will be interesting to see what the candidates propose to do about the gas supply and demand.
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