Surging U.S. production of petroleum and natural gas will enable us to support our allies, but we must support policies that will keep our options open in the long run.
By Senator Pete Domenici and Margot Anderson
The crises unfolding in Ukraine and Iraq have prompted a vigorous discussion among policymakers about what role U.S. energy exports can play to quell volatile global energy markets, as well as what the limits of U.S. energy exports will be. If anything, current events have only underscored the urgent need for greater diversity in global LNG and crude oil trade, and in particular the need for greater international oil and gas supplies from stable countries—a long-standing goal of U.S. energy policy.
Over the last year, we have studied the emerging trends in global oil and natural gas production and how they impact energy markets, diplomacy, the environment, and economic growth.
It is clear now, as it was when we began our inquiry a year ago, that the United States has far more abundant petroleum and natural gas resources than was previously known. In other words, good news rather than concern over scarcity provided the inspiration and backdrop for our deliberations.
But the world has changed in many unforeseen ways. Global energy markets face a long-term supply challenge in order to meet growing demand in the developing world for crude oil, which is projected to increase by 25 million barrels per day between now and 2040. Over the medium term, tight oil can and will supply the incremental demand from global oil markets. Tight oil, however, is not a panacea; production from onshore tight oil plays in the United States will inevitably decline. The United States will need to look to new frontiers—including shale formations outside U.S. borders as well as ultra deep water and Arctic resources—to meet demand and to ensure global energy security and diversity of supply. This will require careful planning and preparation, as well as refinement of the technologies and practices needed to access these resources in a manner that is both cost-effective and environmentally sound. Achieving these goals will take an inordinate amount of time and planning, and there is a pressing need to start today.
The interconnection between growing use of natural gas, efforts to deploy emerging clean energy technologies, and policies to mitigate climate change has also evolved. While natural gas has lower air emissions than coal and the ability to aid in the integration of intermittent energy sources into the grid, there is the potential for friction in the dynamic between natural gas and other low-carbon energy technologies, such as carbon capture and storage, nuclear power, and renewables. Many low-carbon energy technologies are relatively less economic in light of abundant natural gas supplies, though the nation’s long-term success in tackling climate change still hinges on keeping energy options open – and those options require investment in low-carbon technologies at the same time that policymakers are seeking significant discretionary spending cuts.
The United States must continue to invest in research and development for the most promising energy technologies, even if those technologies are currently uneconomic in light of the natural gas boom. It will be important to balance budget concerns with the need to fund energy R&D in pursuit of the technologies that expert scientists tell us are the most imperative. Diversity in the country’s electric power sector paid dividends to U.S. consumers in the time that has passed since the 1970s energy crisis. Let’s ensure that we make the investments needed today to lock in another four decades of secure, affordable energy for the American people.
Pete Domenici is a former United States senator from New Mexico and a senior fellow at the Bipartisan Policy Center. Margot Anderson is the executive director of the Energy Project at the Bipartisan Policy Center. Read key themes from BPC’s discussion series here.