With Oil Prices Forecast to Reach $147 A Barrel, Experts Examine Energy Policy
February 28, 2012
The George C. Marshall Institute recently hosted a briefing on Capitol Hill to examine what we’ve learned from the past 40 years of energy policy. Panelists—including Karen Harbert, President and CEO of the U.S. Chamber of Commerce’s Institute for 21st Century Energy; Lucian Pugliaresi, President at the Energy Policy Research Foundation; and Mark Mills, founder and CEO of Digital Power Group—spoke to the difficulties of supplying the growing domestic energy demand while competition for global energy resources escalates due to the industrial emergence of China, India, and other nations.
The good news is that the U.S. is awash in energy. From tight seam oil and shale gas to offshore oil and natural gas, the U.S. could rival Middle Eastern oil rich countries in energy production. As new private sector technologies continue to invent more cost efficient drilling techniques, entrepreneurs will also continue to make energy use more efficient in the U.S. The combination of vast resources and ever-advancing technology means that America’s energy resources are virtually bottomless.
But as the panelists explain in the following video clip, we need access in order to take advantage of this bottomless energy supply. As Harbert so aptly puts it:
Are we going to use it or are we going to tell people ‘you know what, rather than go to Nebraska you should go to Nigeria; rather than go to the Marcellus, we’d rather you go to Mozambique?’
Increased access is not the only area where the government must work with the private sector. Once oil and gas is extracted and refined, it still must be moved to the areas where U.S. demand is the highest. To achieve this, the U.S. will need to significantly increase and update the existing energy infrastructure. Thus far, these updates have been problematic.
For example, a recently finished crucial 90 mile transmission line connecting West Virginia and Virginia took 18 years to complete. The project was bogged down in permitting procedures and lawsuits for 16 years before the two year construction project could commence. This is an unacceptable timeline if the country hopes to move the resources that our refined in the middle of the country out to the coasts. As we work through this, we will need to work with our closest ally, Canada, to provide our energy security.
In particular, Pugliaresi weighs in on the issue of the Keystone XL pipeline in the following clip. He notes:
Under NAFTA, the Canadians can send all of the oil they want to us. They can ship it by backpack, by truck, by rail, by ocean tanker. It’s only the cross border pipeline that’s causing the problem, which turns out to be the most cost effective and environmentally friendly alternative … Think about Keystone. They’ve been studying this longer than it took us to prosecute World War II.
While only five percent of the workforce works in the actual energy industry, 95 percent of people work at jobs which consume energy. That means everyone’s welfare is tied to the affordability, availability, and reliably of energy. But the biggest hurdle to that may be, as Mills puts it, “policy stupidity”:
The thing that’s bottomless is innovation and technology. Because everything about energy is about innovation and technology, then energy’s availability is bottomless. It doesn’t mean we won’t have price spikes. I forecasted it will bust through the ol’ $147 a barrel price sometime in the next year or two a couple of Forbes columns ago, and I believe it will. I’m a short term bull in oil prices because of policy stupidity not because of a lack of oil abundance. And I’m a long term bear.
The President has a great opportunity to utilize energy for economic benefit. So far, he has chosen instead to push for massive tax increases and resource moratoriums while putting all his chips on unproven and overly costly renewable resources. A change is needed if we hope to see an energized American economy over the next several decades.