Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on June 15, 2013
US Moving Toward Controversial New Role in Global Energy Market
Energy specialists say that advancements in fossil fuel extraction technologies have sparked a “revolution” in U.S. energy production, especially given radical recent changes in the global energy market and the U.S. role within it.
New extraction methods, such as horizontal drilling and hydraulic fracturing (“fracking”), have allowed producers to access natural gas and oil (known as “tight” or “unconventional” oil) in recent years that was once inaccessible.
Such access, brought about by technologies developed and still used primarily in the United States, have already changed the country’s approach to producing and consuming energy.
“The tight oil boom holds the potential to free [the United States] from spending literally trillions of dollars to buy petroleum products from the politically unstable areas of the world,” Pete Domenici, a former senator and currently a senior fellow at the Bipartisan Policy Centre (BPC), a Washington think tank that hosted a discussion on energy Wednesday.
“Tight oil has truly been an unexpected gift to our nation and to our hemisphere.”
Propelled by the boom in U.S. production, North America is today the fastest-growing region in the world in terms of fossil fuel production. As Daniel Yergin, an energy scholar, pointed out during Wednesday’s conference, the United States produces 43 percent more oil than it did in 2008 – the equivalent, he said, of having another major producing country enter the market.
A recent study by CitiGroup indicates if this growth continues, real gross domestic product (GDP) in the United States could increase by 3 percent, a bump that analysts say would help lower the country’s deficit and create jobs.
— Jamie Henn
It would also give the United States more flexibility in dealing more harshly with oil-producing adversaries, such as Iran.
A new role in the global energy market
Yet while many had hoped that increased U.S. production would significantly reduce prices both in the United States and internationally, others believe it will have the opposite result.
Participants in Wednesday’s discussion generally agreed that the United States will likely become an exporter of both liquefied natural gas (LNG) and even crude oil in the near future. Like other exporters, it will prefer higher world energy prices.
“The U.S. no longer looks at prices purely from a consumer’s perspective,” Katherine Spector, head of commodities strategy at CIBC World Markets, said Thursday. Instead, she suggested that the country now looks for “goldilocks” prices: those that are neither too high nor too low.
Her statement corroborates analysis, such as that of Public Citizen‘s Energy Program, a non-profit public advocacy group, which concluded that “because oil prices are priced globally, the domestic oil boom can’t – and won’t – provide relief for consumers”.
Opponents of U.S. LNG exports have sought to prevent them, but in recent months two deals were reached with the Obama administration to allow U.S. companies to liquefy and export gas.
Along with what Domenici called a formerly “heretical” notion that the United States may export light crude oil, the deals represent a drastic shift from the country’s current model, under which its fossil fuel-related exports are almost exclusively finished petroleum products.
Holding back alternatives
Meanwhile, environmentalists are increasingly warning that the new technologies could worsen global warming, despite widespread suggestions that natural gas burns more cleanly than coal, for example.
“We are already seeing the devastating effects of global warming due to an overuse of fossil fuels,” Jamie Henn, communications director for the environmental advocacy group 350.org, told IPS. “The idea should be to de-carbonise the economy, but the exploitation of these new, extreme sources of carbon-based energy is moving us in the wrong direction.”
Henn also pointed to an additional danger of non-U.S. companies, with less advanced technologies, trying to replicate these extraction methods and potentially leading to environmental disaster. Leaking methane from fracking operations is one of the most potent climate change-causing greenhouse gases.
While Henn would like to see the global energy market transition away from fossil fuels and towards alternative energy sources, he said the primary obstacle is money.
“We already have access to cleaner, renewable energy sources,” he says. “But the transition to these sources is being held back because more profit can be made by exploiting these new, extreme sources of fossil fuels.”
In order for the North American production boom to continue, experts who spoke Wednesday said investments in controversial infrastructure projects, such as the Canada-United States Keystone XL pipeline and LNG export terminal facilities, will have to be realised.
Senator Lisa Murkowski of Alaska was one of the speakers in favour of these investments.
The senator pointed to Canada’s “abundant” supply of heavy crude oil, which she said is well-suited for the Gulf of Mexico refineries, and a problem of “too much oil and too few pipelines”, thus advocating for the controversial Keystone pipeline, which is currently pending U.S government approval.
She also stated her support for investment in U.S. capabilities to liquefy and export its natural gas surplus, saying it could lead to a “golden age of gas”.
Objections to the Keystone project have come to define the environmental movement in Washington over the past year, but the proposed LNG export terminal facilities also raise important environmental concerns.
Without strong government policies regulating emissions from natural gas production and use, the likely results of U.S. LNG exports would be “an increase in domestic greenhouse gas emissions, and questionable, if any, benefits to the global climate”, James Bradbury, a senior associate on climate and energy issues at the World Resource Institute, a Washington think tank, told IPS.
Furthermore, facilities that liquefy natural gas consume substantial electricity, while public debate has barely begun here on how energy prices would change once significant U.S. natural gas becomes available on the global market.
“Any amount of LNG exports would put upward pressure on U.S. natural gas prices,” Bradbury says. “This would make natural gas less competitive in U.S. electricity markets, likely causing a shift toward greater coal-fired power generation. This would cause an increase in U.S. greenhouse gas emissions.”
5 Comments on "US Moving Toward Controversial New Role in Global Energy Market"
BillT on Sat, 15th Jun 2013 3:13 pm
The conversion to liquid, shipment and the re-gasification on the other end requires the same amount of energy as in the gas liquified. Meaning, if it is worth $5 as a gas here, in Europe or Asia, it would cost at least $10 to make a profit on the same volume. At least that is my understanding of the situation. So, if we have say 10 years worth here and liquify it, that turns into 5 years worth on the other end.
This is another bullshit propaganda article trying to keep the suckers from abandoning the sinking hydrocarbon ship.
“…real gross domestic product (GDP) in the United States could increase by 3 percent…” putting the actual increase at minus 3 percent… And Citi is a TBTF bankster cabal member and lies through their teeth as they are bankrupt and the world is beginning to see it.
BillT on Sat, 15th Jun 2013 3:19 pm
BTW: I know this is a ‘renewables’ rag. More people living off of the sheeple’s ignorance. The people in charge of the world don’t give a damn about ‘renewables’ or anything that could change their acquisition of as much wealth an power as possible before it all collapses. They don’t give a damn about pollution or anything that affects the bottom line. The elite are the ‘asteroid that will kill the world’. Only Mother Nature can stop their plans. I’m rooting for her.
GregT on Sat, 15th Jun 2013 4:10 pm
“The people in charge of the world don’t give a damn about ‘renewables’ or anything that could change their acquisition of as much wealth an power as possible before it all collapses. ”
Agreed.
The real question is; What exactly is their plan for when the collapse happens? Because you can be sure that they have a plan, and I doubt very much that their plan will benefit the rest of us.
mike on Sat, 15th Jun 2013 4:19 pm
GregT, looking at what previous elites have done during collapse eras, we can tell that it will be pretty much business as usual for them. They will continue what they are doing except exponentially more of it with exponentially less effect. Some will build small kingdoms for themselves and usher in the neo-feudalism right around the corner, but the majority will die just like their historical counterparts.
I think you give elites too much credit. They are just as dumb as the rest of us (if not more so) the only difference with them is they are willing to kill,cheat,lie and maim to get where they are. There is no elite conspiracy other than the lust for power and money.
BillT on Sun, 16th Jun 2013 6:14 am
GregT, many of them are in their 60 or older, much older. I doubt they have any concern for 2030’s world. As for their own well being, if you had billions, what would you do with it? That there are rumors of underground cities does not surprise me. What can their supposed wealth of $50,000,000,000,000.+ not buy? I think you could build a city for 1,000,000 very easily for that amount. They don’t need more than that.
Read H.G.Wells’ “Time Machine” and see what his thought were on the future after we destroy the Earth. It is so close to reality that it scares me, knowing that I would be one of the Eloi and they would be the Morlocks…