Pssst, I Heard this Rumor that There’s an Oil and Gas Boom in the U.S.

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.

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  1. Peter Galuszka Avatar
    Peter Galuszka

    My, my! What a sunny scenario!

    A few little problems. While the natural gas boom does displace far dirtier fossil fuels such as coal and keeps nuclear at bay (post Fukushima and the Virginia earthquakes), there are a few little points somehow and curiously missing from your blog:

    (1) Groovy gas has its own limits — infrastructure to transport and store it. We may be reaching those limits. If gas prices drop even more, there’s actually less incentive for the energy firms to build more infrastructure.

    (2) Gas cannot be replaced..Not like wind or solar.

    (3) Fracking has its own environmental dangers — which you do not address.

    (4) The U.S. has been getting less and less oil from the Middle East for years and years. This little tidbit seems to go unnoticed by many sides in the debate.

    (5) You make SO much about Solyndra but forget about Teapot Dome, the oil depletion allowance , the octopus of Standard Oil trusts and plenty of other mischief that the petroleum industry has been up to since Titusville.

  2. DJRippert Avatar

    So, Jimbo ….

    America is awash in natural gas? Good. I guess we can start decommissioning those pollution spewing coal fired electricity generation plants then?

    Whoa! What? Both of Virginia’s Democratic US Senators joined with Republicans to block legislation to do just that?

    I guess the long armed tentacle of the Richmond business cabal stretches all the way to Washington and transcends party lines.

    Here we are in a world where hydraulic fracturing blows natural gas into our lives in a manner so gentle it reminds us of a baby’s kiss. This bonanza of clean natural gas lets us replace mercury belching, smog inducing, Earth warming coal fired electrical generation plants.

    Unless, of course, you are from Virginia. It seems that Senators Webb and Warner failed to get the necessary permission from Massey Energy and Dominion Resources to acknowledge the fracking revolution you so eloquently describe.

    Perhaps Senator Webb is thinking ahead to a lucrative consulting career with BigCoal after his departure from the Senate early next year. Warner still has, at least, a few years to go. In his case, it seems you can the the man out of the Clown Show but never really take the clown out of the man.

    Disgraceful behavior by both of our elected puppets.

  3. Richard Avatar

    Good points all. I would add that when you eliminate the subsidies for alternative energy that you also eliminate subsidies for oil (many many billions I am told) and that the environmental costs of the use of oil be recovered. Also a question – isn’t government action a significant reason that the mpg’s for our fleet of autos has increased?

    1. Yes, eliminate subsidies for fossil fuels. Create a level playing field so investment decisions are based on economics, not how much you donated to your congressman (see Rippert’s comment above).

  4. Peter Galuszka Avatar
    Peter Galuszka

    Small point, but Massey Energy went out of existence a year ago and never was into fracking.

    1. DJRippert Avatar


      I guess Massey (Richmond, VA) was purchased by Alpha Natural Resources (Bristol, VA) for $7.1B. Something tells me that the puppeteers in Richmond are still pulling Webb and Warner’s strings – whether for Massey or Alpha.

      As for fracking – you missed the point. Fracking should make it cheaper and easier to replace coal burning electrical plants with natural gas burning plants. But, as you say, Massey (and Natural) don’t have any natural gas – only coal.

      So – when the EPA wanted regulations to reduce pollution under the Clean Air Act Webb and Warner both went against the current Administration. Now, why would two nice Democrats go against the Democratic president?

      Because Massey / Alpha told them to? If not, why DID they do this?

      Disgraceful. Just disgraceful.

  5. Peter, the Environmental Defense Fund, hardly a conservative group, has been working with the Industry and the Obama administration to develop standards for fracking. ” But it also concluded that “the U.S. shale gas resource has enormous potential to provide economic and environmental benefits for the country.”

  6. Peter, the Environmental Defense Fund, hardly a conservative group, has been working with the Industry and the Obama administration to develop standards for fracking. ” But it also concluded that “the U.S. shale gas resource has enormous potential to provide economic and environmental benefits for the country.”

  7. DJRippert Avatar


    The near term choice is somewhat straight forward:

    Do you want to avoid the risks of fracking by continuing to burn coal or reduce the risks of coal by fracking?

    I see no real choice here.

    Coal is bad for the environment. Natural gas is vastly better.

    Jim also misses a point. Electric cars. If they run on electricity created by burning coal – that electricity will (eventually) be subject to some kind of significant carbon tax. That will reduce the demand for electric cars and keep us on foreign oil longer. If they run on electricity created by natural gas – that electricity will (eventually) be subject to a lower carbon tax. That will help “grease the skids” for electric cars that use no gasoline.

  8. larryg Avatar

    re: coal vs nat gas.

    I concur although “fraking” and “tight” oil from my reading are more akin to squeezing a sponge rather than sipping at a seemingly neverending reservoir and longevity is at issue and some say we’re slurping the last bit with a straw.

    We know this. “Exhausted, “played-out”, “depleted” oil fields are very much real.

    the “cost to extract” is much higher with these “new” supplies and $70 a barrel may be too low for stuff like Tar sands and shale (different from “tight” oil”. Shale oil has to be “cooked” to release and the energy required to “cook” is high and real.

    I think the best we can hope for is a respite – perhaps a decade ..maybe longer but the trend is not in doubt.

    What’s also made it look like a bonanza is the falling demand …. we do not produce more oil than we did 10 years ago. We use less.

    Oil is finite, sure enough but the earth is a big place….also.

    One of our problems is that we as individuals don’t have a good enough feel for how much we are consuming. Yeah …we got those national numbers…but how about..say at the NoVa or Richmond or Hamption/Beach scope?

    How much oil do we use in NoVa per day? I would surmise that knowing tha number and asking where that oil comes form might show it in a much more “finite”perspective.

    For that matter, how much oil do you use? If you had to get your behind down to the refinery to buy a years worth of gasoline how big a tank would you need and how big a wallet?

  9. While we may end our reliance on overseas oil, we will never end our slavery to their pricing. So, if OPEC says crude will be $150 a barrel tomorrow, our domestic producers will go along gladly. Also, when can I put some of that fracked stuff in my super jumbo SUV? Bosun

  10. Fracking isn’t the real issue: infrastrucure is. 2011 saw a record number of gas explosions. the existing infrastructure is aging,and much new infrastructurew will be needed.

    Cryoygenic natual gas is not something to be taken lightly, and neither is highly compressed non-cryogenic gas. How many times have you seen photos of a house, or several houses obliterated by a gas leak? Yoyu can multiply that by hundreds as gas becomes more prevalent, and expect bigger accidents as bigger storage facilities are required.

    Then there is the automotive market. Remember the Pinto’s? That is going to be chicken feed compred to what happens when a heavy truck rupturse its tanks. Gasoline is flammable and it can explode under some conditions, but natural gas is explosive: it only burns in a controlled manner if you control it.

    Fracking is childs play compared to what happens next.

    This Week In Natural Gas Leaks and Explosions – April 23, 2012

  11. The usual suspects were looking for punters in the Northern Neck recently to sign oil and gas leases. The salesmen were as rosy-glassed about it as Mr. Bacon.

    Google “environmental dangers of fracking” and you’ll see why I didn’t sign.

    1. Groveton Avatar


      An honest question …

      Which is more dangerous:

      1. Fracking to get natural gas, or …
      2. Continuing to generate electricity using coal?

      I see fracking to get natural gas as the lesser of two evils.

    2. Will the oil & gas companies be fracking in Virginia? Isn’t that a technique used for oil shale?

      1. Vito Corleone Avatar
        Vito Corleone

        Fracking has been taking place in Southwest Virginia for many years.

  12. larryg Avatar

    there are two kinds of oil “shale” I believe. One kind is the kind you can get by “fracking” and the other kind is physically bound to the rock and has to be “cooked” which means it has to be mined, extracted, cooked and something done with the tailings.

    FWIW – I have the same question as Groveton. My guess is that most people are not really aware of just how dirty coal-generated electricity is and especially so the mercury which does not readily break down in the environment. As a result, virtually every river and waterbody downstream of coal-burning plants in Va is contaminated with mercury.

    Nat Gas is STILL a fossil fuel and still generates some but much lower levels of pollution.

    Nat Gas is already replacing coal though :’

  13. Speaking of dirty coal, check out the Bacon’s Rebellion home page. There’s an advance plug for PeterG’s soon-to-be0-published book, “Thunder on the Mountain.”

  14. From the “Idiots in NoVA” Department. Use renewables even though it increases the price of energy, which, in turn, has negative consequences on individuals and businesses. Then raise taxes to give money to lower income people. The real solution – federal budget sequestration to reduce the size of NoVA, and the even-more out-of-touch Maryland and D.C.

  15. larryg Avatar

    I’ve done a fair amount of travelling in the last two weeks and I’ve seen solar panel and wind turbine installations and I’ve also noticed just how much vacant and no-longer-used land there is in rural America where many/most who live there are not affluent and live quite modestly.

    I think Nat Gas is the “middle” choice, the “bridge” between solar/wind and coal.

    I point out that in places like Europe and Asia and California/New York which prices electricity higher, that people use less – and still live well.

    A lot of our “use” is wasteful and unnecessary but it’s so cheap that people do not care.

    In my travels, I’ve noted the difference between campground showers that are “free” (including expensive hot water) and the one’s that cost a mere quarter for 5 minutes….

    One can get a really nice luxurious shower for a quarter but when it’s free.. the length of time of use is wanton.

    In the “free” showers, there are lines of people. In the quarter showers, no problem.

    This pretty much exemplifies Americans approach to energy use IMHO.

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