News alert! There's an oil boom in North Dakota! Who would have known?
by James A. Bacon
I never cease to be amazed by the cluelessness of alternative energy advocates. They endlessly repeat the mantra about United States dependence upon foreign source of oil as justification for investing billions in clean energy sources that supposedly will give our economy a huge lift. It’s as if the most important development in the energy economy of the past 40 years — the fracking revolution — had not happened at all.
A recent case in point was an op-ed written by Edward L. Flippin, a McGuire Woods attorney and a lecturer in energy regulation and policy at Duke and the University of Virginia, and published in the Times-Dispatch. He commenced with a recitation of the usual facts: With only 2% of the world’s proven oil reserves, the U.S. imports 45% of its oil. Those imports drain billions of dollars and millions of jobs from the economy. Ergo, he argued, the answer is investing billions of dollars to seize the mantle of global alternative-energy leadership.
Now consider this from today’s Wall Street Journal:
America will halve its reliance on Middle Eastern oil by the end of this decade and could end it completely by 2035 due to declining demand and the rapid growth of new petroleum sources in the Western Hemisphere, energy analysts now anticipate. …
By 2020, nearly half of the crude oil America consumes will be produced at home, while 82% will come from this side of the Atlantic. … By 2035, oil shipments from the Middle East to North America “could almost be nonexistent,” the Organization of Petroleum Exporting Countries predicted.
While the U.S. still will be importing much of its oil, those imports will come from countries like Canada, Mexico and Brazil, whose economies are far more closely intertwined with ours than Middle Eastern countries. As those countries prosper, they are more likely to import goods and services from the U.S.
And that doesn’t even touch upon the boom in natural gas production! An energy revolution is roiling the planet today. But it was totally unanticipated by the politicians, advocacy groups and other big thinkers who championed wind, solar and other alternatives.
Flippin notes how global investment in clean-energy technologies has boomed in recent years, as if that were a sign of emerging competitiveness, yet he then frets what will happen when federal subsidies phase out by 75% over the next few years. Moreover, there is nary a word in his op-ed about the parade of solar energy debacles such as Solyndra, Willard & Kelsey Solar Group, Beacon Power and others, the retreat in Western Europe from high-priced alternative fuels, nor the enormous potential for clean natural gas to displace dirty coal in electric power generation. He’s not just cherry picking facts — he’s cherry picking world-changing mega-trends!
I myself was a believer in “peak oil,” or at least a modified form of it. Although I had enough faith in market dynamics to know that higher oil prices would stimulate more oil production and that we weren’t going to “run out” of oil any time soon, I did think that demand from China, India and other developing countries would swamp any marginal increases in oil production that the energy sector could manage. I expected oil prices to hit a new, higher plateau — and I certainly didn’t expect a massive rebound in North American production. Well, I was wrong, and I’m honest enough to admit it.
Not only are cheaper oil and gas propping up the pathetic growth rate of the U.S. economy — I dare say we’d be experiencing negative growth were it not for the fracking revolution — cheap gas is giving the U.S. a competitive advantage in energy-intensive industries such as chemicals, thus hastening a manufacturing renaissance.
It amazes me that serious people are still trying to engineer a shift to uncompetitive alternative fuels through such mechanisms as Renewable Portfolio Standards, such as the one we have in Virginia. Given enough time and technology breakthroughs, clean, alternative fuels will become competitive with fossil fuels. It makes sense for the federal government to sponsor research to accelerate the development of those alternatives, for we will surely need them eventually. But it is foolish in a time of budget austerity and a sputtering economy to be steering tens of billions of dollars nationally into commercializing technologies that are not yet ready for prime time.
