Washington's political class often seems impervious to changing facts. Case in point is the nation's current and probable future access to essential energy resources, especially fossil fuels like oil, natural gas and coal. This trio of carbon-based fuels accounts for the vast majority of the nation's electrical and other forms of power, and will continue to do so through at least 2020, according to the U.S. Department of Energy. The United States is the world's largest consumer of energy, but is also the world's most productive economy, so demand here for energy resources is going to continue to grow for the foreseeable future.
According to the conventional wisdom, supplies will soon peak and then the nation will experience severe declines in the supply of oil and natural gas. Thus, the U.S. should invest billions in the development of renewable energy resources and use the power of government to create artificial consumer demand for them by imposing mandates for their use. Energy costs “will necessarily skyrocket,” to use President Obama's memorable words, but that's the price the nation must pay in order to achieve energy independence and protect the environment.
When the price of a barrel of oil hit $147 per barrel in July 2008 and Americans were paying as much as $4 per gallon for gas, that scenario seemed reasonable. But it turns out that in the years since, the energy market has experienced profound changes that negate the conventional view. As the New York Times recently reported, “Just as it seemed that the world was running on fumes, giant oil fields were discovered off the coasts of Brazil and Africa, and Canadian oil sands projects expanded so fast, they now provide North America with more oil than Saudi Arabia. In addition, the United States has increased domestic oil production for the first time in a generation.”
The significant news wasn't restricted to oil. The Times also noted that “another wave of natural gas drilling has taken off in shale rock fields across the United States, and more shale gas drilling is just beginning in Europe and Asia. Add to that an increase in liquefied natural gas export terminals around the world that connected gas, which once had to be flared off, to the world market, and gas prices have plummeted.” The result, according to the Times, is that energy experts now predict decades of residential and commercial power at reasonable prices.”
In other words, the nation can look forward to abundant oil and natural gas supplies at affordable prices for decades to come. As Institute for Energy Research President Thomas J. Pyle puts it, “We can improve our economy, create jobs, and increase our supply of affordable, reliable energy in one fell swoop if the government allows businesses to look for and produce American energy.” Consumers should ask how much longer Washington will continue policies meant to restrict access to these resources.