Energy - America's Treasure
Readers should acknowledge how blessed America is for having an abundance of diverse energy supplies. Over the past few years, we’ve gained new insights into means to recover this bounty for industrial and personal/private uses. This column will explore more about this bright future.
Fatih Birol, International Energy Agency Chief Economist, recently wrote that “for the next 20 years, low energy costs caused by … development of shale gas and energy infrastructure will give the U.S. a large competitive advantage over other nations. For many years in natural gas and electricity prices, there will be a substantial cost differential between the U.S. and … economic competitors. Today, gas prices in Europe are three times higher than in the U.S. and five times higher in Asia. No other commodity is valued at such major price differential.”
Concurrently, Ernest Moniz, U.S. Secretary of Energy, avoided “quantitative statements” relating to this windfall, including: one-third of world demand for truck fuels comes from Asia for the next two decades, European governments are backing away from “renewables” and 1.3 billion people worldwide lack electricity. If you get my drift, domestic and international market studies give an overwhelming edge to U.S. energy providers and manufacturers during the period from today to 2035. America needs a federal government that understands and supports using this energy advantage.
Recall that over 40 years ago, when crude oil cost less than $20 a barrel (inflation adjusted), OPEC accounted for a bit more than 5% of U.S. national consumption. That quickly rose to over 50%, and the price has gone through the roof. Oil is still needed for 93% of all transportation fuels. Due to discoveries and technology changes, however, America has emerged as self-sufficient in energy production from conventional and unconventional as well as onshore and offshore extractions. We are also the world’s largest producer and largest exporter of energy.
Industry studies indicate that over the next two decades:
• U.S. energy production will rise 24% and consumption rise 3%.
• Declines in oil (-18%), coal (-12%) and nuclear (-17%) demand will be offset by growth in natural gas consumption (+24%).
• Natural gas will be the leading energy source, rising from 30% today to 35% in 2035, while oil’s share will fall from 36% to 29%.
• Energy consumed in electric power generation will rise by 10% by 2035, while coal remains the dominant fuel (but with its share dropping from 43% to 35%).
• Energy consumed in transportation will fall by 18%.
• Production of oil (+37%) and natural gas (+45%) will outpace declines in coal (-20%).
• Share of global demand will fall from 18% today to 13% in 2035, while the share for China will rise from 22% to 27%.
This energy bonanza foretells wonderful news for U.S. manufacturing industries. More than 150,000 medium and heavy trucks are powered by natural gas today. This fleet is forecast to grow to 9 million over the next two decades. There are 180,000 electric and hybrid cars and light trucks on U.S. roads today, and that is projected to grow to 250 million in these same 20 years. Fully a third of world increase in oil demand comes from Asian trucks alone.
If you are not in the truck biz, maybe you make stuff for the infrastructure that produces energy. It is predicted that oil, gas and gas liquids “midstream infrastructure” will need $30 billion per year over the next 22 years for transmission pipelines (850 miles per year of gas mainlines), pumping, gathering lines (14,000 miles per year), fractionation plants, export facilities (1.8% annual increase), storage tanks and new (580,000 horsepower annually) gas compression sites. For crude oil, the nation needs 750 miles per year for new pipelines, 7,800 miles annually for new gathering lines and 6 million barrels per day of crude-oil storage capacity.
Good people, there is a disconnect between you as industry producers and the federal forces that have no clue about the realities expressed above and the “how” and “why” (the two most important words in any language) these national benefits are correctly defined and used. The ball is in your court to help our country seize the advantages summarized above and to convey the importance and the magnitude of the opportunity that America enjoys. In other words, tell your Congressman and Senator what to do and to get on with the job. IH